Nordic Semiconductor ASA Stock

At this time, I'd like to welcome everyone to this Nordic Semiconductor Q2 2026 Presentation. [Operator Instructions] This call is being recorded.

I'd now like to turn the call over to Head of Investor Relations, Steel. Please begin.

Thank you, Rasmus, and good morning, everyone. Please note that this presentation, as Rasmus said, is being recorded and will be accessible afterwards on our Investor Relations website, where you also find the earnings press release, quarterly report and presentation material.

With me today, we have our CEO, Vegard Wollan; CFO, Pal Elstad. They will share details about our second quarter 2026 financial performance and update on key business developments. Following the presentation, we will move on to Q&A segment. During this time, live questions can be submitted through the Q&A dial-in feature. For instruction on how to dial in, please refer to the earnings call invitation available under stock exchange notice on our IR website. Please keep in mind that the dial-in is required only if you like to ask questions.

As a reminder, this presentation includes forward-looking statements that comes with inherent risks and uncertainties. Actual outcome may differ materially from statements expressed or implied. We highly recommend reviewing our detailed Q2 2026 quarterly report and the '25 annual report for deeper understanding of the risks and uncertainties that could impact our business operations.

With that, I will now hand the microphone over to our CEO, Vegard Wollan.

Thank you, Steel, and good morning, everyone. Q2 was another solid quarter for Nordic, both operationally and financially. Our product renewal program continues to progress very well, both strengthening our competitive position and expanding our addressable market. At the same time, we continue to develop our software offering and have launched cutting-edge AI tools that enable developers to speed up and improve the quality of their product development processes. And we continue to grow our cloud services business, which increased the lifetime value of our products.

Financially, we achieved record revenue in the second quarter and increased by 33% to $219 million. This was once again at the high end of our guiding range, and this brings revenue for the last 12 months to $759 million, up 21% from the second quarter last year. As in the first quarter, we saw growth both in short range and long range and among both large customers and the broad market and across the consumer and industrial health care segments. Gross margin was 53.1% in the second quarter, up from 50.7% in the second quarter last year and from 52.1% in the first quarter this year. Overall, this generated an EBITDA of $36 million when adjusted for noncash cost effects related to the Memfault acquisition, up from $21 million in the second quarter last year and from $24 million in the first quarter.

As I just mentioned, we continue to see growth both among our key customers and in the broad market. And this quarter, we see particularly strong performance in the broad market. Revenue from the top 10 customers are at an all-time high on a rolling 12-month basis, and we are continuing to grow the design activity with our key customers at a high level. However, we have said for a long time that it has been a clear priority for us to regain traction in the broad market, and we now see the strongest growth in this area. Broad market revenue is up by almost 60% from the 2024 lows on a rolling 12-month basis, although still almost 20% below the peak levels from 2022. We continue to see great upside potential, and we see both new customers and returning customers.

Looking at the end customer Bluetooth Low Energy certifications, we account for 31% of the total number of certifications, although we dropped somewhat below 30% in the second quarter isolated. Designs based on the new ?nRF54 series accounted for more than 20% of the certifications in Q2, and this will continue to increase over time. It's important to note that this is only counting numbers of certifications and it does not distinguish between high and low-volume end products. And because of that, this cannot be translated into volume or revenue market shares.

Last time, I spoke about 4 key growth drivers for Nordic. The first is the continuing wireless connectivity market growth, which creates an attractive business environment for us. The other 3 are up to us. And with an ever broader portfolio of next-generation hardware, cutting-edge software and developer tools and a growing cloud services offering, we are strengthening our competitive position, expanding our addressable market and increasing the life cycle value per customer and product. What sets us apart in this competitive environment is our complete chip-to-cloud solution.

Nordic is continuing to build a position as a trusted partner to its customers from concept idea through product development and all the way to the end product life cycle. We have world-class ultra-low power hardware, offering wireless connectivity on multiple protocols, the highest performance processing and compute capabilities on the market and continuously growing power management portfolio. We have a strong stack of embedded software solutions, including the nRF Connect software development kit that works across the complete chip-to-cloud solution and the newly launched AI-assisted development tools that I will get back to in a minute. And we have our growing cloud services business that enables secure over-the-air monitoring, debugging, firmware updating of devices in the field and compliance with the EU Cyber Resilience Act and other regulations coming.

Let's first take a closer look by clicking in on our hardware portfolio. This is a very busy slide, but it necessarily is so. If we have to show the increasing breadth of our portfolio that enables Nordic to capture the broad market and open entirely new opportunities. In 2 years now, we have executed an aggressive road map built on the highly competitive 22-nanometer processes from our key partners, GlobalFoundries and TSMC. In short range, you see the growing number of SoCs in the new nRF54 series, spanning from entry-level parts such as the different nRF54L05 variants through the mainstream 54L10, L15 to the high-end, large memory 54LM20 A and B, and the 54H20, aimed meet the complexity and functionality that intelligence at the edge [ new ] demands.

These adds to the nRF54 and the nRF53 series, which have also served us so well over the past decade and still accounts for the bulk of revenue and even still have new design wins. In the middle of our -- in the middle, you see our long-range portfolio. We introduced the nRF9151 in late 2024. And at Mobile World Congress in March this year, we announced the upcoming nRF 92 and the 93 series, including the new Smart modem variants. This future-ready cellular IoT portfolio now spans TE-M, NB-IoT, satellite NTN, and Cat 1 bis,? with options for both integrated applications processors with the open MCU series and external application processors in the smart modem series of the 90 -- 9X series.

Then we have the Wi-Fi portfolio where we expect to make a step change forward with the upcoming nRF71 series based on 22-nanometer technology and our most modern technology platform. Underpinning all 3 spanning short-range, long-range and Wi-Fi are the growing portfolio of power management solutions and range extenders. They complement the entire portfolio, improving usability and extending the addressable market. Summing up, this represents the broadest and most modern product portfolio for low-power wireless communication in the market. We are addressing an ever-increasing part of the commercial opportunity, and we have only just begun to see the financial impact of the overall product renewal program.

On top of our hardware, software and services pillars, there is one thing that ties it all together, which increasingly sets us apart. Developer experience has always been Nordic's strengths built on trusted, established development tools, high-performance connectivity and software stacks, documentation and support. That foundation gives developers a proven starting point when building on Nordic solutions. AI has the potential to assist developers across the entire product life cycle from prototyping and board bring up to debugging, release validation, fleet management, and there are many trying this at the moment.

However, generic AI assistants often lack the hardware SDK configuration and device-specific context required for reliable embedded development, which creates a real pain point for developers and end product development. Nordic's AI-assisted development capabilities address this by giving AI assistants access to verified Nordic context, including nRF Connect SDK, documentation, API references, device configurations and even field data from nRF cloud. This is unique, and the ground truth is high-quality data from Nordic and the high-quality Nordic foundation for developers. And this truly solves pain points experienced by developers. This means we are now helping developers to speed up their development cycles and achieve higher quality results.

With that, I'll leave it to Pal to take you through the financials.

Thank you, Vegard, for a very interesting review of our products and systems and tools we have enabling our customers to develop their products. I'll now run through the financials for Q2. As Vegard mentioned, revenue amounted to $219 million in the second quarter of 2026, an increase of 33% from the same quarter last year and 14% increase from the previous quarter. This is the highest quarterly revenue we have ever reported. The previous highest was $202 million back in 2022.

On a rolling 12-month basis, revenue increased by 21% to $759 million. The revenue growth mainly reflects Nordic's strengthened competitive position in the short-range wireless communications market with short-range revenue increasing 29% to around $200 million. Although short-range is driving our growth with more than 90% of total revenue, we see strong growth in the other business units. Long-range revenue almost doubled to $15 million with both higher product sales and higher cloud services revenue after last year's acquisition of Memfault. Although the scale is smaller, it's also worth noting close to a doubling of other revenue to $4 million, mainly driven by increased sales of PMICs and development kits.

Turning to the end user markets. We see growth across all areas. Consumer revenue increased by 25% year-over-year to $125 million and now accounts for 57% of total revenue. Consumer growth continues to be relatively broad-based across most verticals. Industrial and Healthcare revenue increased by 45% to $86 million and accounts for 40% of the total. Growth in this segment continues to reflect strong health care numbers and increasing contribution from long range, which mainly goes to the industrial consumers.

As we have communicated for a long time, revenue in Industrial Healthcare will still depend on a relatively small number of customers with high sales to individual key customers supporting revenue also in this quarter. This means that we will see significant variations from quarter-to-quarter. Interesting point this quarter is that our other revenue grew to $7 million, up from $4 million last year. Other revenue mainly reflects online catalog sales, supporting the positive development that Vegard mentioned in the broad market.

Turning to gross profit. Gross profit was $116 million in Q2, up from $83 million in the same quarter last year. The gross margin hence increased to 53.1% from 50.7% last year. The increased margin reflects changes in product mix, higher sales to broad market customers and increasing positive contribution from high-margin cloud services revenue. We expect the gross margin to remain above 50% also in the third quarter and reiterate our long-term ambition to keep gross margins above the 50% level.

The growth is improving margins and increasing our operational leverage. With 33% revenue growth and improving gross margins, gross profit increased by 40%. With higher volumes, we also see the effects of the operational leverage in our business model. The adjusted EBITDA margin increased by close to 4% to 16.6% and adjusted EBITDA increased by 75% year-over-year to $36 million. Splitting our cost base, you see that R&D increased in both absolute terms and in percentage of revenue. We continue to invest in the short-range portfolio, although this area accounts for less than 60% of R&D spending despite accounting for more than 90% of revenue.

The R&D to revenue ratio in this area has now dropped to around 15%. However, we still invest a significant amount in R&D in long-range and/or early-stage businesses. And combined, these account for more than 40% of R&D despite accounting for just 10% of revenue. These are investments for the future. And as revenue grows over time, we expect gradually more balanced R&D to revenue ratios also in these areas. SG&A OpEx also increased somewhat in absolute terms, although the higher revenue means that R&D -- no, the SG&A to revenue declined by almost 2 percentage points to 13.7%.

Turning to cash cost development. In absolute terms, you can see that cash costs have increased from around $63 million in the second quarter last year to $80 million this year. Salaries accounted for $14 million of the increase with around $4 million explained by acquisitions done last year, $2 million from salary adjustments and $5 million from variable pay accruals. In addition, we have approximately $3 million negative effect of the weaker U.S. dollar. At the end of the first half year, Nordic had 1,465 employees, including the 59 employees that joined 2 acquisitions last year. This corresponds to an organic increase of 6% and a total increase of 10% compared to the same period last year.

Other cash expenses amounted to $26 million, up from $23 million last year, mainly driven by higher hardware and software spend, along with increased sales activity. I said last time that we overall expected a similar cash cost level in Q2 as in Q1. And although we saw a $2 million increase, we are pretty much on the same level as the last couple of quarters after we took on the acquisitions. Overall, we see no major changes to the cost picture in the third quarter. CapEx in the second quarter was $8 million, slightly below both the second quarter 2025 and the first quarter this year. Around 90% of this is back-end production testers as we're investing for added manufacturing capacity throughout the supply chain. CapEx intensity over the last 12 months is 3.8%, back within the 3% to 4% range we have typically seen over the last few years.

Turning to cash flow. Overall, there was a slight reduction in cash during the quarter. However, it is important to understand the underlying developments. Operational cash flow from operations of $15 million was driven by profits. However, the reduction versus last year is explained by an increase in working capital during the quarter. The increase in working capital is driven by higher inventory that mainly reflects a deliberate front-end loaded build to secure supply and capacity. Nordic has raised wafer purchases to support the ramp of next-generation products, notably the nRF54 Series and to build inventory ahead of the additional test capacity being brought online in the supply chain, as I commented on the CapEx slide.

As a result, net working capital was $200 million at the end of Q2, up from $143 million last year. Measured as a percentage of last 12 months revenue, net working capital increased to 26%. This is slightly above our target of 25%. Finally, cash and cash equivalents ended at $276 million, which is a strong balance sheet to support future growth. In addition, we have $200 million in an unused credit facility. Before handing the word back to Vegard, we can have a look at our near-term outlook.

Based on current customer orders and forecasts, we are guiding for revenue of $220 million to $240 million in the third quarter of 2026. This corresponds to a year-on-year growth between 23% to 34% or a midpoint of 28% and sequential growth between 1% and 10%. We reported a gross margin of 53% in Q2 and expect the gross margin to remain above the 50% also in the third quarter.

With that, I'll leave the floor over to Vegard for some closing remarks. Vegard?

Thank you, Paul. As I said last time, we are progressing to plan financially, operationally and strategically. And it's good to see the positive developments continuing, and I'm extremely proud of the Nordic team execution at the moment. Financially, we reported 33% growth on a record high revenue of $219 million for the second quarter. With improving gross margins and good cost control, this translates into a 75% year-on-year growth in adjusted EBITDA. And as Paul just said, we expect continued growth in the third quarter. Operationally, we see short-range nRF54 series and the broadening long-range portfolio gaining momentum and start contributing more to revenue.

Moving forward, we will continue with an extensive product renewal program and advancing our chip-to-cloud solutions. To support all this, we have introduced AI-assisted development tools that will add speed and quality to our customers' product development processes, all the way from first prototype to the deployed fleet. It is a strategic goal to increase the lifetime value of our products and services. And by adding new software and solutions, we are increasing the value through our nRF cloud life cycle services.

And finally, we continue to strengthen our organization. This quarter, we welcome Jo Uthus, an old colleague of mine from Atmel and Microchip as EVP with responsible for marketing and developer experience in Nordic. And Christer Roth, who many of you will know from his long tenure as a research analyst and investment banker with DNB Carnegie. He will take responsibility for strategy and corporate development, and both will be valuable additions to our management team working on a clear strategic profitable growth agenda.

With that, I think we are ready and open for questions, and I'll hand back over to you, Steel.

Thank you, Vegard. We will now open the line for questions. For instructions on how to join the Q&A, please refer to the earnings call invitation posted on our IR website under the Stock Exchange Notice section.

With that, I will hand over to Rasmus to begin the Q&A session.

[Operator Instructions] Our first question is from the line of Christoffer Bjornsen from DNB Carnegie.

Congrats on a great quarter. I just wanted to get your thoughts on some more outlook stuff. You have now several quarters with top line momentum ahead of your own expectations. It seems and it seems to be tracking well ahead of the growth trajectory you set out at the Capital Markets Day. At the same time, you're seeing clear signs of pull forward in different segments and amid supply crunch and some customers raising prices and products because of the memory situation and some people struggling with demand disruptions. I just want to give an opportunity to give any thoughts on whether the recent strength in revenues is coming on the back of the pull forward or if you see any whatsoever signs that we might be having to give this back in future quarters or into 2027? I appreciate you don't guide specifically, but just any like how you see the market now would be appreciated. And then I have a follow-up.

Yes. Thanks, Christoffer. I think our strength, which we are experiencing at the moment is multi-folded. So it's a result of a lot of things happening. Obviously, the market is fairly strong. Product renewal process for us is the foundation and it's extremely important to deliver on what we do, and that's executing very well for us. So I think all of this is obviously very important for us, and that's really what we are working and driving internally. I think on the near-term tactics of potential pull-ins or not, we obviously all see the semiconductor market overall being extremely tight and maybe even continue to be tighter and tighter at the moment from a supply side, although I think we are well supported and managing this extremely well with our key partners at the moment.

But I think overall, key thing for us is that market continues to improve. And we don't see evidence of pull-ins, particularly with our key customers and the largest customers we have, which is a fairly large group even beyond these top 10, which we obviously exchange a lot closer to. Having said that, I think there is some angst and concern in the market for potential constraints. That's obvious, and we all hear about that. So we cannot rule out the possibility that some customers are advancing orders because they worry about future capacity constraints, either from us or elsewhere.

All right. That's clear. And for my follow-up, I just wanted to double-click a bit on the guidance for Q3. We've all seen that some of your customers and your key customers have had particular supply chain challenges ahead of the second quarter. So just trying to understand if you in any way have reflected any particular headwinds in that guidance number in any part of the range for Q3? Or if not, if that's something to come later on in Q4 or how we should think about that being reflected at all?

I guess the forecast we have is based on very tight dialogue with our customers. And as Vegard said, it's not possible to rule out all possibilities, but it's based on a very detailed analysis and discussions with our customers and also then seeing the market improving.

Our next question will be from the line of Sebastien Sztabowicz from Kepler Cheuvreux.

On the long range, could you comment a little bit on the order intake over the past few months? Just wanted to understand the growth of the second quarter. Is it more driven by the consolidation of Memfault or it is also the product business picking up strongly? And on the nRF92 series, when should we expect the first volume to kick in? And the follow-up question will be on the pricing environment in the market. We have seen many of the competitors raising prices. What have you done so far? And what do you want to do? And attached to that, how do you see your input cost trending in the next few quarters?

That's probably 3, 4 questions, Sebastien. I appreciate that. Thank you. We'll try to cover that. Yes. I think as a starting point, as in prior quarters, we are not breaking out our cloud services and long-range hardware business separately. I think we can assure you that they are both growing, and they are both growing, I would say, as we also said initially, amongst our breadth of customers as well as breadth of segments. So we see that happen in both of that, and we are very pleased with that. And yes, I think that was a long-range question.

On the nRF92 Series contributing to revenue. It's a product which we have just started to sample to some key customers, lots of interest, lots of execution happening on the 92 at the moment. We have seen a fairly solid ramp of the 9151. The 92 Series is a successor to that, which is planned exactly this way. So we are all in all, very comfortable with our current solution and the bring up of the next generation in long range on that regard. And the 92 series is a great product with a lot more compute power, a lot more performance of an already market-leading product. So it's a great position we feel we are in with that at the moment.

Last question was around pricing and cost, I think. And Sebastien, I think on a general note, we need to say there that we don't specifically call out any changes we do on outbound pricing to our customers nor do we talk about our COGS and costs from our suppliers. Having said that, I think it's also clear that we all see the semiconductor market is very tight on most process nodes, back-end assembly and test at the moment. And we are working extremely closely with all of our supply partners as well as customers, and what we are doing is having a clear aim to balance growth and margins. And I think we are doing that at the moment, and our plan is clearly to be continuing doing that. Did that cover all the topics?

Our next question will be from the line of Om Bakhda from Jefferies.

My first question was on your gross margin. So we've seen this is the second quarter where your gross margin has gone up very nicely to 53%. And I was wondering how much of this positive effect was attributed to broad market momentum versus potentially the cloud software service accretion.

I think it's a good mix of the 3 items I mentioned. First of all, it's a customer mix. So the broad market improving this quarter. You saw that on the slide Vegard mentioned. So that has a positive impact. Also on the product mix is important, seeing more influx of the nRF54 in the equation. And then, of course, finally, the contribution from the cloud is a positive impact. So I guess summing up the 3 of them is explaining the increase year-over-year.

Okay. And so would you then say that the nRF54 is proving to be gross margin accretive in the initial revenues that you're getting? And then also just as a follow-up on -- you mentioned that the other sales, that being PMIC and development kits had doubled in the quarter. So I'm just wondering if you're seeing that the 54 series is now providing a platform where you're seeing more stickiness on your adjacencies and so that being customers then designing in and more likely to design in on PMIC solutions.

It's a very delicate question. And I think we have to say we don't share specific margins on sub families, obviously, of competitive reasons and protecting Nordic optimizing, balancing our margin picture at the current and future times. So I don't think we can answer that specifically. I think what we can say generally is obviously that 64 Series is running on a very modern optimized processing technologies from TSMC and GF, the L&H series. Extremely important for us. We think that's very modern, high-performance, cost-optimized technology, which is a good place to be in at the moment. That's in a tighter space. So we are quite pleased about that positioning compared to some of our competitors.

And then there was a question on PMIC and also the, I guess, cross-sell with and how that impacts.

Yes. And I think in that regard, you can usually say that's also usually not a disadvantage if you look at it from a margin point of view. So without being specific on anything, I think that's as much as we can say on that. Thanks for asking.

The next question will be from the line of Oystein Lodgaard from ABG.

Congrats on the good quarter. Just a couple of questions on cellular. Cellular did very well this quarter. Can you say something about how much of revenues now are from like 9151? How much is still the older 9160? And can you also say something about which categories are driving the strong growth we're seeing in cellular in this quarter?

Yes. Thanks, Oystein. We appreciate the interest and the question. And again, to protect our competitive position, we are not sharing how the mix is between, let's say, new products vis-a-vis older products. I think we can generally say that the 9151, similarly as the 54 series is starting to contribute to revenues and the design activity has been and is very strong on these new products, which we are very much appreciating. I think overall, in cellular, I think also having taken the leading -- technically leading position on the NTN and satellite connectivity within IoT, I think that's another tailwind and a driver, which is strong for us on the cellular and long-range side, has been now for about a year's time since we started prototype with the very first customers. And there is a lot of people either selecting Nordic for that optionality for future enablement or they enable that immediately. And so I do want to mention that, and we will -- we are now also commenting on that, that we believe we will see customers now coming with Nordic products, long range using NTN with satellite connectivity throughout the second half of this year.

Interesting. And both -- we're seeing now an acceleration both in cellular and PMIC. Is this something you expect to continue that we're now seeing kind of an inflection point in the segments and that they should continue to grow strongly in quarters ahead?

Yes. Again, I said I think we've got to be cautious about talking too much ahead because we are we are stringent on our guiding principles. I think we -- what we do see at the moment, particularly in long-range and PMIC is that we are executing to that plan we have communicated a couple of years ago. And of course, we say we are on track to execute on that plan, which, yes, you can read out what continuation you believe that leads to. But we are not guiding beyond the current quarter, but executing to plan, and that's what you are seeing.

Our next question will be from the line of Martin Jungfleisch from BNP Paribas.

First question is really on demand visibility as a follow-up. What are your thoughts on the seasonality on revenues this year? Would you still expect that kind of Q3 is the best quarter and you see Q4 down around the usual 5% sequentially? And is there any moving parts that would potentially make seasonality a bit different this year?

Yes. Thanks, Martin. And again, I think I just need to repeat that we don't guide beyond the current quarter. So we don't guide and talk about Q4 at the moment. I think generally, we can just say there are different forces, pros and cons to the seasonality effect. But of course, I think overall, the consumer market portion of Nordic business is it's relatively large. And there is a natural seasonality in that part of the market, and that's not something we are changing. Thanks, Martin.

Okay. Yes. And then just secondly, on the OpEx. OpEx was a bit higher in the second quarter sequentially. What are your thoughts on OpEx going into Q3? Remember last year, you had this, I think OpEx and payroll were a bit higher sequentially Q-on-Q in the third quarter. So what are your expectations around payroll specifically going into Q3?

Yes. If you look at from Q2 to Q3 last year, there was a step-up. That came due to acquisitions, FX impact and also and also higher variable pay. That's been pretty stable over the last 3 quarters, and we expect it to be relatively stable into Q3. Of course, FX is difficult to predict, and there will be some salary increases also this year, but overall, relatively stable from Q2 to Q3.

Our next question will be from the line of Andrea Olson from Danske Bank.

Congrats with the solid quarter. Just a follow-up on questions on long range. Can you give any breakdown on how much of the long-range revenues is cellular IoT compared to Memfault in Q2 and also comments on your expectations for both of these segments into the next quarters. You mentioned that we will see some customers using satellite technology. Can we expect that in next quarter?

Yes. Thank you. I think we -- yes. So we have decided not to break out our cloud services revenue separately, and we are currently reporting it, as you know, under the long-range and cellular products business. And we are doing that for protecting our competitiveness reasons. So that's why we are continuing to do that. What I can assure you is that they are both growing and progressing well and to the plans at the moment. And we are still obviously developing them jointly and cohesively in the 3-pillar strategy, while we also expand our nRF cloud services to be enabled and applicable even more so and in an even stronger way to all Nordic products, obviously, and also being our forefront mechanism to enable Cyber Resilience Act compliance as well as our customers' ability to update access and from an AI point of view, have the solid monitoring and interaction with their products in the market. I think it's fair to say that both the long-range hardware and the nRF cloud solutions are currently very solidly developing for us, both with key customers and in the broad market. And that's the same for both of them. I think that's probably as much as we can share and will share of some -- to give some color on that and the details have to come a bit later.

And the question on satellites. You've talked a lot about that on the designs we have there and how that's developing.

Yes. I think on the satellite technology, it's also a lot about having this optionality for quite a lot of customers such that, that can be enabled, and that's a great thing you can do with Nordic. You can either start using it immediately or you can via a software upgrade. And again, using nRF cloud for that software upgrade, you are in good hands with Nordic. And we see people planning for that immediately when they launch products and some other people planning for that in a later stage. And we are expanding and developing further with more and more satellite systems and technologies and providers. And as I also said, during the second half, we will see first commercial products in the market based on Nordic technology and NTN satellite systems.

Our next question will be from the line of Craig Mcdowell from JP Morgan.

My first one was on channel inventory and in particular in your large distributor customers. I think the year started relatively low in terms of channel inventory there. Can you talk about how that's trending and how you see sell-through? And then my second question was on your own inventory, a big step-up from Q1 into Q2. Can you just remind us of the composition here? Should we see that as precautionary ahead of potential wafer price rises, et cetera?

If we start with distribution inventories, we haven't commented it, but it's more or less unchanged from what we said in Q1, so at healthy levels. When it comes to inventory, it's -- the buildup is it's a deliberate buildup. We're buying wafers. We're planning for growth and we're securing wafer deliveries into our production. It's a good question. We've mixed -- we have it in wafers, we have in semifinished, but we have it in finished goods. So it's a healthy mix between these 3 categories in our inventory.

Our next question will be from the line of Markus Heiberg from SEB.

So I have one question here. It's on the design registration. So maybe you can elaborate more on the 115 Bluetooth designs that you have, which is around 28% of your addressable market. So on a last 12-month basis, it's up moderately year-over-year, I would say. But do you think it's possible to really regain the market share in your broad market without this market share going back to 40%? I appreciate that you have higher value now per design, but do you expect your historical market share also to trend towards historical levels on this metric?

Yes. It's a great question, Markus. I think, first of all, we remain a very clear market leader here in terms of product certifications. And again, you have -- the certification activity will naturally vary a bit from quarter-to-quarter, and that's depending individual customer design cycles and a lot of things. I think what we want to make sure we say in this regard is that we -- it's important that we don't look at this as a model for revenue market share or volume market share. So we are presenting the data, continuing to present the data. I have to say mainly to be consistent with the past, but we also see reasons for this not necessarily being a good reflector of what's happening. And I don't want to get into the details of that because that's probably a much longer discussion. But the key thing is that this is truly counting number of designs. There are other reasons which we may talk about at a separate point in time. So I think we are strong here. We are confident in what we are seeing, and it's something we are happy with. At the same time, we warn with some caution about how to assess and analyze based on the certification share.

Our next question will be from the line of Christoffer Bjornsen from DNB Carnegie.

So I just wanted to double a bit more on the 54H. You had it available to lead customers, but not really as far as we can see, kind of expanded availability to the broad market. Could you maybe give an update on how that's progressing with those lead customers, like how many customers are you handhelding in supporting that ramp? And what kind of timing are you thinking about kind of the true proper scale ramps there? We already see it in gaming and so on, but those are not maybe the biggest volume applications in the market for that kind of product? That would be helpful.

Yes. That's -- thanks, Christoffer. Great question. I think 54H20 is a very good product, and we already now see quite a few customers actually in the market with products based on it. And it is our highest performance device at the moment in the short-range space aside with the 54LM20 series. And these are built for the most demanding applications, high-end applications, and we work with several key customers to develop products on both the 54H20 and the LM20. So we have several key customers developing on both of them. On the H20, that is a complex product, and it's still requiring additional support from Nordic for our customers. to utilize the full capabilities of the 54H20. That's why we are focusing the support for the broad market with the nRF54L [ LM ] series, where the current 54LM20 A and B, which also has 2 megabytes of memory is competing very well and winning very strong designs in that market, too. Thanks for the question, Christoffer.

Our next question will be from the line of Sebastien Sztabowicz from Kepler Cheuvreux.

A follow-up on the healthcare business. Have you made any specific progress to diversify your healthcare business beyond your large customer? And do you see the opportunity in the healthcare market developing both in the short term, but also more on the midterm view?

Yes. Thanks, Sebastien. Very good question. I think the healthcare market is developing very interestingly for us, and we are providing quite a lot of different solutions into that space at the moment. We have very large customers here, but we also have quite a few smaller and midsized customers. And we have customers both, I would say, utilizing all of our products. So we have customers here also on long-range products, nRF cloud and PMIC products. In the coming time, expecting Wi-Fi products as well. So there is a breadth here, and it's growing systemically. We are investing in it, and that's really something we are -- we believe in as a future important segment for us. CGM obviously being a key driver for some of the highest volume growth opportunities in that space at the moment. But there is also quite a lot additional opportunity happening in connected healthcare and connected medical devices which is where obviously having the highest quality wireless connectivity makes a lot of sense. So that is clearly a space for Nordic Semiconductor. Thank you, Sebastien.

Thanks, Sebastien. As we have no further questions in the queue, I'll hand the word back to Steel.

Thank you, Rasmus. Before we close today's session, I have one brief announcement. Nordic will conduct 2 post Q2 result Q&A group calls with analysts and investors. The first group call will be for U.S. investors and will be hosted by Jefferies and is scheduled for today, Thursday, 6th of August at 5:00 p.m. Central European Summer Time. The second group call will be for European investors hosted by UBS. and is scheduled for tomorrow, Friday at 11:00 a.m. Central European Summer Time. Both calls will be attended by Vegard Wollan and Pal Elstad. Each call will be moderated by the covering analysts at respective brokerage. For registration details, please visit the IR calendar on our website.

With that, I will now hand over to Vegard Wollan for his closing remarks.

Thank you, everyone. Great questions today. Thanks for joining us, and this concludes today's call. Thank you.

Good morning, ladies and gentlemen. I'm Dieter May, and I'm Chair of the Board of Directors of Nordic Semiconductor ASA. And it's my pleasure to welcome you today to this virtual general meeting where all shareholders participate digitally. I would like to thank all the shareholders who have logged in today.

I will now hand over to Christian Skovly-Guttormsen, Head of Legal and the Company Secretary, who has been proposed to chair the meeting today. Christian, it's your turn.

Thank you, Dieter. Good morning, everyone. We will now close the login and then take attendance for the record. So out of 197 million shares with right to vote, we have received prevotes of approximately 134 million shares. By proxy, approximately 1.7 million shares, meaning that the full amount of votes -- sorry, shares represented today is 136 million, amounting to 69% of the total amount of shares represented today. And the exact figures will be in the minutes from the meeting.

So we have then been through the first item on the agenda, which is the opening of the meeting by the Chair and registration of the shareholders present. And this is a no voting item.

So we will move on to the second item on the agenda, election of the meeting chair and individual to sign the meeting minutes. So I have been proposed to chair this meeting together with Pal Elstad, our CFO, and also propose to sign the meeting minutes. So please cast your votes now on this Item #2.

[Voting]

So we will wait a little bit so everyone gets a chance to vote, and we will close the voting now and wait for the results to arrive. So the voting is closed and the item is approved. All the exact figures again will be appearing in the meeting protocol.

So we will move to the third item on the agenda, which is the approval of invitation and the agenda for general meeting. No comments have been received to this item, and we ask you to cast your votes for this Item #3 now.

[Voting]

So the voting is now closed, and we will get the numbers. And so the item has been approved and is closed.

We will move on to the annual financial statements and the Board report, which is the fourth item. Approval of the annual financial statements and the Board of Directors' report, including consolidated accounts and year-end allocations for 2025.

And I will hand it over to our CFO, Pal Elstad, and also note that our auditor from PwC, Eivind Nilsen, is available should there be any questions.

Okay. So thank you. The financial highlights for 2025. Nordic reported $668 million in revenue, which was a 31% year-over-year increase. Gross margins at 52% or 51% adjusted. Significant improvement versus 2024. EBITDA of $67 million or a 10% EBITDA margin.

We ended the year with a solid $307 million in cash, which was up $20 million year-over-year. Strategically, it was a strong year, solid progress operationally, strategically and financially on track to long-term ambitions.

M&A integration. Integrated Memfault, Atlazo and Neuton during the year, strengthening software, cloud and life cycle. Related to market leadership, clear leader in BLE, 32% share of end product certifications over the last year.

Here, you see the trajectory over the last years from a low in 2024 of $500 million. As I said, we increased revenue by 31% to $668 million in 2025. So we are on track for a 20% long-term ambitions to grow 20% over the 5 years from the Capital Markets Day in 2024 and to reach an EBITDA level of 25% within the 5-year period. Okay.

Thank you, Pal. We will then proceed to vote for Item #4. So please cast your votes now.

[Voting]

All right. The voting is now closed, and we will soon get the results. So the item has been approved and the item is closed. Again, the exact voting figures will be included in the minutes.

We will move on to Item #5, consideration of the Board of Directors' report on corporate governance. As per Norwegian Public Limited Companies Act, the general meeting shall consider the statement on corporate governance prepared in accordance with Section 3-3B of the Norwegian Accounting Act. The statement is included in our 2025 annual report, which is available on our website. And this is a no voting item, and there has not been any comments to it. So we will move on to Item #6, power of attorney for the purchase of the company's own shares. This resolution has been thoroughly described in the notice of the Annual General Meeting and no comments have been received. So we'll proceed to a vote on this Item #6.

[Voting]

So we will now close the votes and get the figures. The vote shows that Item #6 has passed and is thereby closed. We will move on to Item #7, which is the power of attorney to issue shares and convertible loans. So this is 2 voting items: power of attorney to the Board of Directors to issue new shares, which is 7A and take up convertible loans, which is 7B. So the proposed resolutions have been described in the notice, and we have not received any comments to these items, and we will be voting on these items individually. So please cast your votes now on Item 7A.

[Voting]

Okay. So the voting is now closed, and we will soon get the result. So for Item 7A, the item has been approved and is thereby closed. Please cast your votes now on Item 7B.

[Voting]

So the Item 7B is now closed, and we will soon get the results. So Item 7B is approved. So we will then move on to Item 8, which is election of shareholder-elected members to serve on the Board of Directors. So the recommendation of Nomination Committee has been presented and made available through the AGM notice. We will proceed to vote on the respective members, and we will be voting individually on these. So please cast your votes now on Item 8A, which is reelection of Chair Dieter May.

[Voting]

So we will then close the votes and wait for the results to arrive. So Item 8A has been approved, and we ask that you now please cast your votes on Item 8B, reelection of Inger Berg Orstavik.

[Voting]

So we will close the vote for Item 8B and wait for the results. So the Item 8B is now closed -- sorry, yes, 8B is now closed, and the item is approved. Please cast your votes now for Item 8C, reelection of Annastiina Hintsa.

[Voting]

So we will now close the Item 8C and wait for the results. So Item 8C has been approved. Please cast your vote now for Item 8D reelection of Helmut Gassel.

[Voting]

So we will now close the vote and wait for the results on Item 8D. And Item 8D has been approved. Please cast your votes now on Item 8E, election of Lars Loddesol.

[Voting]

So we will now close Item 8E and await the results. Item 8E has been approved as well. So again, all the exact figures will be published in the meeting minutes. We will now move on then to Item 9, which is election of Nomination Committee members, where the proposal is for reelection of the existing members of the Nomination Committee for a 1-year term to the Annual General Meeting in 2027. We have not received any comments regarding this item, which has been described in detail in the notice. We will proceed to a vote, and we will be voting on the members individually. So please cast your votes now on Item 9A, reelection of Chair, Fredrik Thoresen.

[Voting]

So we will then close the vote for 9A and await the results. So Item 9A has been approved. We will proceed with 9B, reelection of Eivind Lotsberg. Please cast your votes now.

[Voting]

So we will now close the vote and await the results. So Item 9B has been approved. And we will now cast votes on Item 9C, reelection of Arne Graee. Please cast your votes now.

[Voting]

So we will now close the vote on Item 9C and await the results. Item 9C has been approved. So all Item 9 items have been approved. And we will move on to Item #10, Compensation of Board Nomination Committee and auditor. So this is 3 voting parts. The Nomination Committee proposes that the Annual General Meeting approves compensation for 10A, the Board of Directors; 10B, the Nomination Committee and the Board proposes that the Annual General Meeting approves compensation for 10C, the auditor. So the recommendation and the resolution has been described in detail in the notice and no comments have received. We will proceed to a vote, and we will be voting on these items individually. So please cast your votes now on Item 10A, compensation to the Board of Directors.

[Voting]

We will close Item 10A and await the results. So Item 10A has been approved. We will move on. So please cast your votes on Item 10B now.

[Voting]

So 10B, we will close the voting now and await results. 10B has been approved. We will move on to 10C. Please cast your votes now.

[Voting]

So we will close voting now for Item 10C and await results. So Item 10C has been approved. All Item 10 have received sufficient majority and have been adopted. So we will move on to Item #11, the Board of Directors' remuneration report 2025. The Board has prepared a report on remuneration of leading personnel for the accounting year 2025, which is available on our website. The report is subject to an advisory vote by the general meeting. No comments have been received on this item, which has been described in detail in the notice. So please cast your votes now on Item #11.

[Voting]

So we will now close the vote on Item 11 and await results for this item. So Item 11 has been approved. We will then move on to Item #12, consisting of 2 parts. In Item 12.1, the Board proposes that the general meeting approves the Board of Directors' guidelines and policy for remuneration of senior executives and Item 12.2, where the Board recommends an advisory vote of the long-term equity-linked incentive plan for all employees. We have not received any comments regarding items 12.1 or 2, and we'll proceed with voting individually on these items. Please cast your vote now for Item 12.1.

[Voting]

So we will close the voting on Item 12.1 and await the results. So Item 12.1 has been approved. We will now vote on Item 12.2. Please cast your votes now.

[Voting]

We will now close the vote on Item 12.2 and see what the results are. So Item #12.2 has been approved as well. So that was all the items we had for voting today. We have completed all items on the agenda. Again, the exact figures and participation numbers will be in the meeting minutes. We thank all participants and wish you a continued good day and look forward to seeing you again next year. Thank you.

Thank you.

At this time, I would like to welcome everyone to this Nordic Semiconductor Q1 2026 Presentation. [Operator Instructions]. This call is being recorded.

I would now like to hand the call over to Head of Investor Relations, Stale. Please begin.

Thank you, Rasmus, and good morning, everyone. Please note that this presentation is being recorded and will be accessible on the Nordic website in the Investor Relations section. Additionally, for those of you missing this release, you can find the earnings press release, quarterly report and presentation materials also on our IR website.

With me today, we have our CEO, Vegard Wollan; and our CFO, Pål Elstad. They will share details about our recent financial performance and updates on key business development. Following the presentation, we will move on to the Q&A session. During this time, live questions can be submitted through the Q&A dial-in feature. For instructions on how to dial-in, please refer to the earnings call invitation available under stock exchange notice on our IR website. Please keep in mind that the dial-in is required only if you would like to ask a question.

As a reminder, this presentation includes forward-looking statements that come with inherent risks and uncertainties. Actual outcome may differ materially from those statements expressed or implied. We highly recommend reviewing our detailed Q1 quarterly report and the 2025 annual report for deeper understanding of the risks and uncertainties that could impact our business operation.

With that, I will now hand the microphone to our CEO, Vegard Wollan.

Thank you, Stale, and good morning. We continue our progress according to plan, financially, operationally and strategically. I look forward to present the highlights of the quarter before handing over to Pål to take you through the financials in more detail.

Revenue in the first quarter increased by 24% to $192 million, continuing the solid growth trend we saw through 2025. This was in the high end of our guiding range and brings revenue for the last 12 months to $705 million, up 19% from the first quarter last year. We continue to see growth in both Short-range and Long-range and among both large key customers and in the broad market. And we see year-on-year growth across both the Consumer and the Industrial and Healthcare segments. Gross margin was 52.1% in the first quarter, up from 49.5% in the first quarter last year, and this was roughly on par with the underlying margin level in Q4 2025. This generated an EBITDA of $24 million when adjusted for noncash cost effects related to the Memfault acquisition, up from $15 million in the first quarter last year.

As I mentioned, we continue to see growth both among our key customers and in the broad market. And the top 10 share of revenue has stabilized and actually declined somewhat. Revenue from the top 10 customers are at all-time high on a rolling 12-months basis. And with a high level of ongoing design activity, we continue to see upside potential with these customers. It has been a clear priority for us to regain traction in the broad market, and it is encouraging to see that growth is now picking up in this segment. We see an increasing number of customers, former customers returning, new products entering the market, and the overall design activity remains solid.

Broad market revenue is now more than 40% up from the 2024 lows on a rolling 12 months basis, but remains approximately 25% below peak levels from 2022. That means that we also continue to see significant upside potential in the broad market going forward.

Looking at end customer certifications, we continue to maintain a share in excess of 30%. The overall number of designs certified in Q1 was 133, up from 103 in the fourth quarter of 2025. Designs based on the nRF54 series accounted for a little over 15% this time with the certifications in Q1, and this will increase over time. Please note, this counting of certifications does not distinguish between high and low-volume products, and hence, this cannot be translated directly into volume or revenue market shares.

Q1 reflects strong execution towards an ambitious plan. And I'm proud of what our new business unit teams and our extremely dedicated employees are delivering. This quarter, we continued to deliver on our promises. We are expanding into new addressable markets. We are enabling improved intelligence at the edge, and we are strengthening the chip-to-cloud life cycle value as we evolve to a complete wireless solutions provider.

Let me highlight some of our Q1 launches. Starting with Short-range, Q1 was about continued product expansion and continued differentiation of the nRF54L series, fully in line with our promises and product road map. At the entry level, we recently announced the 54LS05 variants, expanding our reach into more cost and power-sensitive applications, broadening the addressable market while supporting volume growth. At the high end, we reinforce our differentiation with ultra-low-power edge AI by launching the large memory 54LM20B SoC. Together, these additions strengthen the nRF54L series offering across both market reach and capability, supported by the market-leading and trusted Nordic developer experience.

We are also expanding the addressable market in our Long-range offerings. Here, Q1 was about scaling the product portfolio with a clear, credible and market-leading road map. Product manufacturers need future-ready road maps and solutions as networks and satellite connectivity evolve. This is exactly what we are delivering here. With the new nRF92 series, we introduced our next-generation low-power cellular platform with substantially higher compute performance and integrated edge intelligence, built on a more cost-efficient 22-nanometer platform, enabling more adaptive pricing strategies.

With the nRF93 series, we expand into higher bandwidth Cat 1 bis applications, addressing new markets while maintaining Nordic's focus on low power and ease of integration. At the same time, we continue to strengthen the proven nRF91 series, including satellite connectivity, support and sub-gigahertz fallback, ensuring a simple, consistent developer experience across product generations.

Now more on edge AI. Nordic moves far beyond connectivity in this area. We deliver real on-device intelligence by running AI algorithms and neural networks directly on our ultra-low-power wireless SoCs and modules, bringing far more intelligence to the edge node. This matters because processing and decisions increasingly need to be made locally, both reliably and efficiently without cloud dependency. And this is where our differentiation is clear. With the integrated Axon NPUs on our hardware, Nordic delivers industry-leading energy efficiency across a broad range of edge AI applications, setting a new standard for ultra-low-power edge AI. And equally important is the ease of use.

The Nordic Edge AI Lab makes the developer experience effortless, significantly reducing design complexity and accelerating time to market for our customers. Edge AI is an important structural growth driver, and Nordic is positioned to lead it. Our complete ultra-low-power edge AI and chip-to-cloud solutions create compounding advantages that are designed to scale and hard to replicate.

We are also strengthening life cycle value with our chip-to-cloud solutions offering, nRF Cloud. There is a structural shift in the market towards stronger security, life cycle management and long-term maintainability of the fleet of connected products, both driven by the EU Cyber Resilience Act and how customers want to build and operate products over time. This is an area where Nordic is deliberately investing in and executing on. With our newly launched lifetime license for firmware updates and device management, customers get a predictable and scalable way to keep products secure and maintained throughout their entire lifetime. This goes beyond regulatory compliance. It reduces complexity and cost for our customers while improving long-term reliability and trust in the products they bring to market. Through nRF Cloud, we continuously manage and improve the security, software, battery health and intelligence across fleets over the full product lifetime. That is a core part of Nordic's complete chip-to-cloud offering.

With that, over to you, Pål, for more details on the financials.

Thank you, Vegard. Now I'll go into details on Q1 results. As Vegard mentioned, revenue amounted to $192 million in the first quarter of '26, a 24% increase from the same quarter in 2025 and a 14% increase from the previous quarter. On a rolling 12 months basis, revenue increased by 19% to $705 million. The revenue growth reflects Nordic's strong competitive position in a growing Short-range market, a growing Long-range business with higher product sales and cloud services revenue after the acquisition of Memfault.

The Short-range business remains the main revenue driver, growing by 22% year-over-year to $178 million or 92% of revenue. Compared to last quarter, revenue was up 12%. Long-range revenue amounted to $12.5 million in Q1, representing an increase of 66% compared to the first quarter of 2025, and an increase of 43% compared to the previous quarter. The growth reflects both increasing product sales after a slightly weaker Q4 and higher cloud services revenue.

The Other category includes the early-stage businesses in PMIC and Wi-Fi, ASIC components and development tool sales. Other revenue amounted to $2.4 million, up from $1.5 million last year.

Turning to the end user markets. We see a broad growth in the quarter. Consumer is now 60% of total revenue and increased 30% compared to the same period last year and 15% compared to last quarter. Consumer sales is back to growth after a few quarters with low year-over-year growth due to strong comparables. While Industrial and Healthcare is 38% of total, Consumer growth is relatively broad-based across several verticals with particular strength in PC Accessories and Gaming driving the year-on-year and quarter-on-quarter increase.

Industrial and Healthcare also contributes meaningfully to the quarter's growth. Continued strong Healthcare numbers, strong Long-range, which for the most part goes to the Industrial customers, but also an improvement in the broad market contributes to the growth. However, as we have said before, revenue in Industrial and Healthcare still depends on a relatively small number of customers, and the quarterly revenue level reflects high sales to individual key customers also in this quarter.

Gross profit was just over $100 million in Q1, up from $77 million a year ago. The reported gross margin increased to 52.1% from 49.5% last year. The year-on-year improvement of 2.6 percentage points was primarily driven by changes in customer and product mix, higher sales in the broad market and positive contribution from cloud services revenue. Compared to adjusted numbers for Q4 2025, Q1 gross margin was up 0.1 percentage points, broadly stable sequentially on an adjusted basis. We expect the gross margin to remain above 50% also in Q2, and we reiterate our long-term ambition to keep gross margins above 50%.

Looking at the operating model, we have already talked about the 24% revenue increase and the strengthening gross margins. R&D has increased in absolute terms, but declined as a percentage of revenue, and it's worth looking a bit closer at where we spend our investments. We're still investing in our Short-range business, but although Short-range accounts for more than 90% of revenue, it now accounts for less than 60% of R&D, and the R&D-to-revenue ratio in this area has dropped to around 15%.

We also have significant R&D investments in our Long-range business and early-stage businesses. These remain very high compared to revenue as they currently account for more than 40% of R&D, but less than 10% of revenue. These are investments for the future. Longer term, we expect significantly higher revenue in these areas and to see R&D-to-revenue decline sharply. Selling and general expenses is up year-on-year because of acquisitions, generally higher activity and the weaker U.S. dollar. Summing up, adjusted EBITDA increased by more than 60% year-over-year with the EBITDA margin improving from 9.5% to 12.4% this quarter.

Now I'm going to talk about the cash cost development. As you know, we continue to invest in future growth, for example, the increase in OpEx as a result of acquired businesses. Total cash operating expenses were $78 million in Q1 compared to $62 million in Q1 2025. The increase in cash operating expenses mainly reflect payroll expenses, which increased to $54 million from $42 million last year. Of the increase, approximately $2 million relates to net salary adjustments and around $4 million relates to acquired businesses. The remaining increase is driven by organic workforce growth of $1.3 million.

Nordic is exposed to currency fluctuations, mainly NOK, euro and U.S. dollars. Compared to Q1, changes in these exchange rates increased quarterly operating expenses by approximately $5 million, mainly reflected in salary. The total number of Nordic employees at the end of Q1 was 1,433, including 59 employees that joined through the acquisitions last year. This corresponds to an organic increase of 4% and a total increase of 8% compared to a year ago. If we compare to last quarter, number of employees is fairly stable, or is pretty stable.

Other cash operating expenses amounted to $24 million in Q1, up from $20 million a year ago, driven by higher hardware and software spend, along with increased sales activity. There are some moving parts here, especially continued weakening of the U.S. dollar, but overall, we expect a similar cash cost level going into Q2.

CapEx this quarter was $9.2 million, up from $1.8 million in the same quarter last year and up from $6.6 million last quarter. The step-up reflects planned investment phasing rather than a change in the underlying run rate. We are planning for growth and currently investing in added manufacturing capacity. The increase this quarter is mainly driven by purchase of additional testers in supply chain to expand back-end production test capacity and support the ramp of new products, including the nRF54 series.

CapEx intensity over the last 12 months is approximately 4.2% of revenue, with the most recent quarter at 4.8%. Historically, CapEx intensity has generally ranged from around 3% to 4% with temporary increases during periods of elevated investments. The current level reflects ongoing product ramp activities, and we expect CapEx intensity to remain around last 12 months levels in the near term.

Turning to cash flow. Operating cash flow was close to breakeven. This compares to EBITDA adjusted for capitalized development expenses of $18 million, with the difference mainly driven by a build in net working capital. Looking at that in more detail, the increase in working capital was mainly driven by higher receivables and inventory, partly offset by higher payables. Inventory ended the quarter at $184 million, up from Q1 last year and year-end. This reflects higher activity levels and the ramp-up of new products. Importantly, this is not an unhealthy buildup. Net working capital as a percentage of last 12 months revenue was 24%, down from 26% last year, indicating improved efficiency despite the increase in absolute levels. On financing, we had outflow of $19 million, broadly in line with last year, mainly related to the share buyback program. Finally, cash and cash equivalents ended at $280 million at the end of the quarter.

Finally, before handing the word back to Vegard, we can have a look at our near-term outlook. Based on current customer orders and forecasts, we're guiding for revenue of $200 million to $220 million in the second quarter, corresponding to a year-on-year growth between 22% and 34% with a midpoint of 28%. We reported a gross margin of 52% in Q1 and expect the gross margin to remain above 50% also in the second quarter.

With that, I'll hand over to Vegard for his final remarks.

Thank you, Pål. Our strategy is fully aligned with these 4 strong growth drivers for Nordic Semiconductor. Firstly, we continue to benefit from sustained market growth driven by the long-term wireless connectivity megatrend and the increasing number of connected IoT devices. Secondly, we are strengthening our competitive position through our renewed world-class product portfolio, enabling us to take market share in the markets we participate in. Thirdly, we are expanding our addressable markets through a broader product portfolio for Nordic to participate in new market segments we haven't previously participated in. And finally, throughout our complete wireless solution spanning hardware, software and cloud services, we are increasing life cycle value per end product. These 4 growth drivers give us confidence in our long-term growth ambitions.

Summing up, we are progressing to plan, financially, operationally and strategically. Financially, we delivered solid year-on-year growth in first quarter with improving gross margins and profitability, keeping us on track for our long-term growth plan. Operationally, execution remains strong. We continue to move at high speed on our extensive product renewal program with multiple launches and announcement across both Short-range and Long-range. Strategically, we are clearly evolving from a hardware supplier to a complete chip-to-cloud wireless solution partner.

With that, we are happy to take your questions, and I'll hand over to Stale.

Thank you, Vegard. We will now open up the line for questions. For instructions on how to join the Q&A., please refer to the earnings call invitation posted on our IR website under Stock Exchange Notice section. To allow as many participants as possible to ask questions before the market opens, we kindly ask you to limit yourself to one question. Following our initial response, you will have the opportunity to ask a follow-up question.

With that, I will hand over to Rasmus, the operator, to begin the Q&A session.

[Operator Instructions] And the first question will be from the line of Christoffer from DNB Carnegie.

So I just wanted to cover a bit the dynamics you're seeing in customer behavior and so on. I think on the Q4 call and talking about Q4 and Q1, Vegard, you mentioned that the strength you were seeing even ruled out somewhat of an impact on that from customers kind of restocking -- not really prestocking but maybe restocking. So can you talk a bit about how customers have behaved during the quarter and what you're seeing thus far? Is the strength -- well, it's a lot better than typical seasonality. So are we seeing any pull forward as people are positioning ahead of a tightening market, because they're worried about shortages in the second half? Talk a bit about the downstream dynamics. That would be super helpful.

Thank you, Christoffer. Yes. So I think the main thing which we clearly see is that the market is continuing improving, and we do see our customers selling more end products. That's clearly the -- it's important to say that, that's truly what we see a lot of, and we see increases and forecast increasing because of that. And I think the Q2 guide, of course, then is based on current customer orders and the forecasts we have at the moment.

Having said that, I think we cannot rule out the option that some customers are advancing orders because they are afraid of future capacity constraints elsewhere, as we know that there are some constraints elsewhere in the semiconductor market and supply chain at the moment. But I think the main thing for us is clearly to say that we see the market improving, and we see our customers being selling more of their end products. And to some degree, we see some customers launching new products.

Okay. Super helpful. And then just a quick follow-up, more forward-looking. I think over the last couple of weeks, you've seen reports noting that not only like AI data center-related stuff is tight, but even like basic NOR flash typically used in IoT devices is entering into allocation. Have you kind of seen any demand destruction or lowered forecast for the second half from customers struggling with getting components sitting next to your components on the PCB for the second half? Do you see any signs that we will see demand disruption at all at this point?

Yes. I think -- just as a first, thanks for the question. I appreciate the interest for second half also, Christoffer. As our guiding principles are fairly clear on not moving beyond the quarter we are talking, that would restrict me from saying much on that. But I think on a general view, we can say that we currently don't see direct impact from memory shortages or memory constraints at our customers on a general basis. We have relatively few customers with larger memories sitting aside a Nordic SoC or a Nordic product. There are obviously some. And I do think -- it's hard for us to measure accurately potential impacts there. And again, I don't think we can completely rule out the fact that, that could give some indirect effects later on. But at the moment, we haven't seen any impact of that either.

The next question will be from the line of Harry Blaiklock from UBS.

The first is just around your expectations on pricing this year. I know we've heard about some manufacturers putting through pricing increases at the back end of last year and then also April this year. Is that something you're doing at all? Or is the expectation still that pricing will be kind of down low single-digit percentage?

Yes. Thanks, Harry. I appreciate the question and the interest in our pricing strategies and policies. We have to say we also keep our pricing and cost strategies confidential and cannot comment specifically on that. Pricing to our customers is generally managed in very close dialogue with our customers, and we remain confident that we are delivering competitive prices and very good value for money. But there is always a certain dynamic both in the pricing and the cost picture, but we don't comment specifically on that. Hope you can appreciate that, Harry. Thanks.

Got it. Makes sense. And I guess my follow-up is kind of related to that, but on the cost side. Kind of how are you expecting cost to progress through the year, both OpEx and COGS, especially within the context of the disruption in the Middle East. But then also, we're obviously hearing about foundry price increases. I know you can't comment kind of specifically about what your foundry pricing -- what you're seeing specifically. But I guess, high level, kind of how are you thinking about those kind of puts and takes and OpEx and COGS for the year?

Yes. I can comment -- thanks, Harry. I can comment on the COGS side first. I think at the moment, it's an area where we're working extremely hard, a lot of attention on this as capacity is becoming slightly tighter in all kind of manufacturing. Also why I think you heard Pål say we are investing quite a lot in capacity now to support our planned growth.

We are working extremely closely with our key foundry and OSAT partners, getting very solid support as we have loyalty both ways, which goes way back in time with our key foundry partners. And again, we cannot comment specifically on that. Should constraints and other materials prices continue to increase, of course, that may impact everyone in this industry. But at the moment, it is manageable. And as I said, we are very well supported by our manufacturing partners overall.

So Harry, on OpEx, I mentioned 2 items before. First of all, our cost is mainly driven by the number of employees we have. And quarter-over-quarter, it's been pretty stable. We only added 3 people during the quarter, and we are trying to improve efficiency, et cetera. So I wouldn't expect a large increase in the number of employees going forward.

On the opposite side, FX is a negative drag. The weak U.S. dollar this quarter compared to a year ago cost us around $5 million in increased OpEx for the quarter. But overall, as I mentioned, we expect Q2 to be broadly in line with Q1 on OpEx levels.

The next question will be from the line of Oliver Wong from Bank of America.

I wanted to ask about Long-range. So now that R&D for Long-range was about 31% of the total, is that kind of what you see going forward? Are you seeing specific opportunities that are kind of perhaps better than what you expected at your last CMD? Any color on what kind of opportunities? And how should we think about kind of potential revenue ramps?

Yes. Thanks, Oliver. So I think Long-range is a segment progressing very well for us. And I would say broadly progressing in line with our ambitious plans. We are expecting this to be growing gradually and continue to be growing gradually from here on. And the premise for that is, of course, the basis of launching new products, which we have talked about and is part of that key plan. So I do think our current plan is to keep our R&D investments relatively flat, as we have communicated in this area. So you should see that 31% go down as revenues are increasing.

But overall, I think we are very, very pleased with our performance in Long-range. We're happy that we're now announcing the very important 92 Series as our main next-generation platform in Long-range based on 22-nanometer with a lot more compute intensity and edge AI, much lower power, which is a very natural extension from all of the 91 Series business, while we also actually make completions to our 91 series while we also expand into Cat 1 bis, which is a new market for us and kind of the other part of the LTE market. So I think overall, very happy and pleased with our position there. I think we are really taking a leadership position product-wise, technically in the market at the moment. The team is extremely energized and executing well. So we are optimistic for the coming time in Long-range.

The next question will be from the line of Craig Mcdowell from JPMorgan.

The first one I had was on the nRF54 launch. You talked about growing proportion of design certifications from that product launch. Wondering whether you can comment on sort of revenue contribution at this point? And then linked to this, can you remind us how we should think about the gross margin impact of this launch? And I've got a follow-up as well.

Yes. Thanks. That's a great question. I think also the 54 launch and the 54 rollout is executing very well. Just to say that proud of the team executing extremely fast and focused and keeping a lot of attention on renewing us in the Short-range space. So if you look at certifications first, last time, I think we said we were slightly short of 15% of the Bluetooth SIG certification. This time we are just above. So it's growing, and we expect that to continue growing very clearly in the coming time.

On the revenue side, it is starting to now begin to generate some meaningful revenues for us. The design activity and the way we measure the design-ins is still continuing very strongly with both key customers and the broad market -- within key customers and within the broad market. So it is very clearly supporting our expectations for the 54 Series, that with these very leading market-leading products, that will be a very key long-term growth driver for Nordic Semiconductor.

And when it comes to gross margin, I think we can say it's a very competitive product. And we're now able to sell the right product to the right customer at the right price. So it should be positive on the gross margins.

Yes. Thanks for reminding me, Pål. I think overall, having the breadth of the product portfolio allows us to tailor more the product to the right solution, as Pål says. And the 22-nanometer production platform is a very solid foundation for us, without being specific on the margins being changed. Yes. Thank you.

And just as a follow-up, just pointing to the Memfault acquisition and obviously, a few months into integration now. Just wondering whether you can give us any sort of data points on maybe cross-sell or revenue synergies? Have you seen some revenue growth accelerate from the, I think, 40% growth juxtaposed? Any color would be great.

Yes. I appreciate the interest there. I think on a general basis, we don't provide stand-alone breakdown on our cloud revenue at the moment. But I think we can clearly confirm that cloud revenue is growing according to our plan, and it is contributing positively to our gross margin. And I think software-based cloud services carry gross margins in line with more general software gross margins, which are somewhat higher than generally on the hardware side. So that's positive.

I think the traction is positive on the cross-selling. We do see high interest. And I think particularly as we are now approaching the requirements of being cyber-resilience ready in Europe, and also similar situation with regulators in the United States. I think customers are becoming more and more aware of that. And of course, allowing us, from a strong product offering side, to be serving a large range of customers instead of each and one of these customers having a small R&D team resolving this by themselves makes a lot of sense, and we do see that traction growing. And the premise that we made the acquisition on is absolutely valid. And I think we are pleased with the current progress we are having in the nRF Cloud space.

The next question will be from the line of Om Bakhda from Jefferies.

I had 2 questions. Firstly, on the presentation deck, we can see that your broad market share has been increasing nicely year-to-date. And I was wondering, is this sort of nRF54 related? And if there's any other sort of end markets or applications that you could flag to be driving the sequential growth within the broad market?

Yes. I think the -- we are pleased to see the broad market gaining traction. And as we said, it's now about 40% above the low levels, still 25% below the peak, but we are seeing this and expecting this to be continuing to strengthen for us as we see the pipeline developing very positively there. I think there is still a blend of wins with old and new products. Of course, every month that we are executing at the moment, we see that percentage of wins based on the 54 Series becoming higher and higher and higher. So I think overall, we are extremely pleased with the competitiveness of the 54 Series broadly in all geographies as well as both with the key customers and within the broad market. So overall strong design activity on that without being specific on the numbers between old and new products.

That's helpful. And then my follow-up is just on sort of the dynamics into the second quarter. So back at fourth quarter results and also on the guidance that you've given, you've mentioned sort of an uptick in customer orders is driving this sequential strength. And so my question is based on these engagements that you're getting, do you feel as though you're getting increased visibility from your customers given the pickup in market conditions?

Yes. I'm a bit uncertain if I really captured the question clearly. But I think the main thing for us at the moment on that side is that we do see the underlying market is improving and our visibility, though, is still in line with recent quarters. Market improving customers are selling more of their products, and that's, of course, encouraging to us. And currently, the Q2 guide is based on that current customer order and forecasting engine, which is always updated within the company.

The next question will be from the line of Øystein Lodgaard from ABG.

I have a question on the Long-range segment. You had very strong growth there this quarter. So just is this kind of the more quarterly variations? Or should we see this as the start of a new trend where growth is accelerating in this segment? And the second is, is this driven by new product launches like the 9151, and the satellite? Or is this still more on the old 9160 model where you're seeing growth?

Yes. It was indeed a strong and a record quarter for Long-range. So we are very pleased with the trajectory there. The growth reflects both higher product sales and, to some degree, increasing revenue contributions from nRF Cloud Services as well. We don't break out the 9160 versus 9151 revenues. As the 54 Series in Short-range is starting to meaningfully contribute, the 9151 is now definitely meaningfully contributing in Long-Range. And I think to some degree, it's relatively early days on NTN and satellite connectivity enablement, But we do see that being designed in and certifications are happening in that area.

We are still at relatively low levels in Long-range. We should, though, expect some variability, somewhat less stability in the revenues compared to Short-range, but we are clearly also expecting this to continue to grow as we have previously communicated. So very pleased with the current quarter for Long-range.

Then a follow-up on kind of your other product areas, PMIC and Wi-Fi. When should we kind of start to see more meaningful revenue contribution from these? Can you say something about the momentum that you're seeing there?

Yes. That's a great question, Øystein. Both those businesses of Wi-Fi and PMIC are still in early commercial phase, which means we report them under the Other segment. PMIC continues to gain very solid design traction on the back of a broader portfolio now. And we also have key customers starting to evaluate our PMIC offering, and the pipeline is growing well in that segment. And again, that will gradually improve and grow that revenue quarter-by-quarter in the coming year is our expectations.

In Wi-Fi, there is design activity ongoing. But as we have communicated also, our nRF70 Wi-Fi companion chip has some limitations in its reach, so we are only utilizing that in certain use cases, while the next-generation nRF71 is assumed and expected to be a leading Wi-Fi SoCs with Nordic's ultra-low-power leadership built on the same 22-nanometer platform as the 54 Series and the 92 series. So we have very high expectations for that, and launch is expected towards the end of the year on that 71 series, and then you have to allow for design-in time and the natural development of that product beyond that.

And we have one follow-up from Christoffer from DNB Carnegie.

Yes. Just on the prepayments to GlobalFoundries, can you talk a bit about whether that is linked to a particular product? Or is it 54H only? Or is that also going to be utilized against 54L if they are manufactured at Global as well? Since that isn't moving down yet, is that only an indication that 54H isn't ramping? Or yes, just anything you could read out to that number in the balance sheet?

Yes. So it's related to GlobalFoundries, and L is another technology. So it's all related to the GF part of the business.

But it's probably important to say that the GF part of the business is more than the 54H at the moment, without being specific on where we manufacture, but on a general note, just mentioning that.

As we have no more questions in the queue, I'll hand it back to Stale for any closing remarks.

Thank you. Before we close today's session, I have one brief announcement. Nordic will conduct two post Q1 2026 results and Q&A group calls with analysts and investors. The first group call for European investors will be hosted by Barclays and is scheduled for tomorrow, Wednesday, 29th of April 2:00 p.m. Central European summertime. The second group call will be for U.S. investors, hosted by ABG Sundal Collier, and is also scheduled for Wednesday at 5:00 p.m. Central European summertime.

Both calls will be attended by CEO, Vegard Wollan; CFO, Pål Elstad, and IR team, and will be moderated by covering analysts at each representative brokerage. For registration, please visit the IR calendar on our website.

With that, I will now hand over to Vegard Wollan for his closing remarks.

Thanks a lot, everyone. Thanks for joining us. This concludes today's call. Thank you.

Thank you.

Welcome to Nordic Semiconductor's Q4 2025 Presentation. [Operator Instructions] This call is being recorded.

I will now hand it over to Stale. Please begin.

Thank you, Kjell, and good morning, everyone. Please note that this presentation is being recorded and will be accessible on the Nordic website in the Investor Relations section. Additionally, for those of you who missed the release, you can find the earnings press release, quarterly report, and presentation material also on our IR website.

With me today, we have the CEO, Vegard Wollan; and our CFO, Pal Elstad. They will share details about our recent financial performance and updates on key business developments. Following the presentation, we will move on to Q&A segment. [Operator Instructions].

As a reminder, this presentation includes forward-looking statements that come with inherent risks and uncertainties. Actual outcome may differ materially from those statements expressed and implied. We highly recommend reviewing our detailed Q 4 quarterly report and the 2024 annual report for a deeper understanding of the risks and uncertainties that could impact our business operations.

With that, I will now hand the microphone over to our CEO, Vegard Wollan.

Thank you, Stale, and good morning, everyone. Today, I'm going to quickly go through the main points of the quarter, then leaving the word for Pal to take you through the financials before I'm returning with my review of 2025 and how we see ourselves progressing towards our long-term goals and ambitions. So let's start with the headline figures of the fourth quarter.

Revenue amounted to $170 million in the fourth quarter, an increase of 13% year-on-year. As expected, revenue declined somewhat from our third to the fourth quarter, and the revenue ended in a higher end of our guiding range. The year-over-year growth was on par with what we saw in the third quarter and reflects that our strong competitive position enable us to benefit from the market improvement throughout 2025.

We see growth both in short range and in long range, and among both large key customers and in the broad market. In terms of end-user markets, we saw continued growth in the Industrial and Healthcare segment, with more modest year-on-year growth in the Consumer segment. This is roughly the same picture as we saw in the third quarter. Gross margin was 55% in the quarter, but as Pal will get back to with more details, this included some reversal of an inventory write-down we took last year. If we exclude that, we still see healthy gross margin levels of 52%, a clear improvement from Q4 2024 and on par with the previous quarter.

The product and customer mix is improving and cloud services revenues after the acquisition of Memfault also contributes positively. Reported EBITDA was $15 million, and adjusted EBITDA, $13 million. This excludes the positive effect of the reversed write-down, partly offset by the quarterly noncash cost effect related to the Memfault acquisition. The top 10 customer share of our revenue has stabilized at 57%, meaning that revenue has grown equally strong among our key customers and in the broad market over the past year.

Revenue in 2025 exceeds the 2022 peak level for our top 10 customers, showing our strong relationships and developments with these customers. We will see many more exciting products coming out from these collaborations in the quarters and years to come. As we have said repeatedly over the past year, it has been a key priority for us to regain momentum also in the broad market. And the revenue in this customer segment is still around 1/3 below peak levels, though we see gradually improving revenue also here.

We remain the clear design win leader when we look at the Bluetooth Low Energy end product certifications, with 32% of the design certifications in both Q4 and for the full year 2025. This is about 3, 4x as many designs as our closest competitor. And please note that this is counting of certifications that does not differ between high and lower volume products. So you cannot translate this directly to revenue. The NRF 54 is now beginning to have a meaningful impact and accounted for about 15% of certifications in Q4. This will continue to increase going forward.

Turning to our products. I would like to highlight some recent product news. The first is the nRF54LV10A, which we have specifically designed for next-generation healthcare wearables such as biosensors and glucose monitors. These products are typically powered by silver oxide coin cell batteries, using lower voltages, and ultra-low power is crucial. Compared to the previous 52 series generation, we achieved between a 30% to 50% lower power consumption while increasing the performance substantially, and this new product positions us perfectly for these high-volume markets.

At the CES in Las Vegas in January, we also introduced another great addition to the nRF54 series. Many applications require local data processing to save bandwidth cost and energy consumption. Other requirements for local processing are applications where you need low latency and on-site response in milliseconds without a round-trip to the cloud or other devices.

Our new nRF54LM20B chip goes a long way in meeting those demands. This is the first SoC integrating our Axon neural processing unit, a very fast and energy-efficient hardware AI accelerator. The Axon NPU is built on technology we acquired with the acquisition of Atlazo a couple of years back, and it offers 7x faster performance and 8x better energy efficiency compared to our -- compared to today's competing technologies. Following the acquisition of Neuton.AI last year, we offer a complete ultralow power Edge AI solution, which, in addition to the 54LM20B chip, includes pre-optimized Neuton models, which are 10x smaller, faster, and more efficient than competing solutions, and the Nordic Edge AI lab, which simplifies development of custom Neuton models based on customer data.

The Neuton models and the Nordic Edge AI lab are ideal for all Nordic SoCs, also including our long-range modules and products. Altogether, this offering dramatically lowered the barrier to bringing AI to battery-powered IoT devices at the edge. We are uniquely positioned to serve the next wave of AI-powered IoT growth across wearables, healthcare devices, and smart sensors.

Within the long-range area, we have seen positive development last year. And besides the stronger commercial development in the cellular operation, one of the most exciting things that has been the qualification of our technology on satellite networks, positioning us as a leading technology and solutions provider within satellite-enabled IoT connectivity. In the fourth quarter, our nRF9151 module was certified for Skylo's satellite network, and we have now established connectivity across multiple leading satellite operators such as Iridium, Myriota, Sateliot, and OQ Technology, in addition to Skylo.

Many customers just want a single solution that just works everywhere, also beyond cellular network coverage, and with seamless coverage across both satellite and cellular networks. We can offer true global IoT connectivity on land, on sea, all around the globe. We're looking forward to the next chapter in our long-range business unit with the launch of the nRF92 approaching this year.

With that, I'll hand over to Por to take you through the financials before I will return with a wrap-up of our developments through '25 and into 2026.

Thank you, Veg. So as Vegard mentioned, revenue amounted to $170 million in the fourth quarter of 2025, a 13% increase from the same quarter in 2024. Full-year revenue was a strong 31% increase to $668 million. The revenue growth reflects Nordic has retained a strong competitive position in the recovering short-range market, built a gradually stronger position in both cellular and satellite within long-range, and added cloud services revenue with the strategic acquisition of Memfault. The short-range business remains the main revenue driver in absolute terms, growing by 13% to $158 million or 93% of revenue.

Compared to last quarter, revenue is down 5%. The revenue level demonstrates the persistent competitive strength of Nordic's product portfolio in the NRF 52 and 53 series of Bluetooth Low Energy products. Revenue contribution from the new and groundbreaking nRF54 series products was limited in 2025 and will start to contribute meaningfully to revenue from 2026 onwards. Long-range revenue amounted to $8.7 million in Q4, representing an increase of 25% compared to the fourth quarter of 2024 and a decline of 11% compared to the previous quarter. The year-on-year increase reflects higher demand on the back end -- back of the 151 launch late 2024 with sales to a broader set of industrial verticals. The growth also reflects increasing cloud services revenue after the acquisition of Memfault, which has performed in line with expectations out plan in connection with the acquisition.

The other category includes early-stage businesses in PMIC and Wi-Fi, ASIC components, and development tool sales. While the technology development in Wi-Fi and PMIC is progressing as planned, these business units are still in an early commercial phase and therefore, included in other.

Turning to the end-user markets. We see that industrial and healthcare is driving growth in the quarter. Industrial and Healthcare is now 37% of the total and increased 20% compared to the same period last year, and more or less flat compared to last quarter. Part of this is because of strong growth we're seeing in long-range, including services, which for the most part goes to industrial customers. However, we have previously said that revenue in industrial and health care still is dependent on a relatively small number of customers, and revenue reflects high sales to individual key customers also in this quarter. Consumer revenue was flat year-on-year with tough comparable from high Q4 last year when we saw especially strong performance in PC accessories.

Turning to gross profit or gross margin. Gross profit was $93 million in Q4, up from $73.8 million in Q4 2024. The reported gross margin increased to 54.9% from 49.1% last year. As Vegard mentioned, reported gross margin included a partial reversal of a write-down of cellular products made in Q2 2024, which had a positive effect of $5 million in the quarter. We have been able to sell more of the old material than originally expected. Adjusted for reversals of the write-down, the gross margin was 52%, reflecting a 2.9 percentage points improvement over the fourth quarter 2024, or marginally up compared to last quarter. This improvement was primarily driven by changes in customer and product mix, higher sales in the broad market, and a positive contribution from cloud services. We maintain our long-term ambition to keep gross margins above 50%.

Yes. Looking at our operating model, the revenue increase of 13% translated into a 20% increase in adjusted gross profit. However, our R&D efforts are also increasing with the ongoing product renewal process and increased activity to deliver on our long-term growth ambitions. Overall, R&D costs increased by 24% to $50 million in the quarter, with the strongest increase in short range due to very high development activity with new nRF54 products. Long-range R&D also increased significantly ahead of the upcoming launch of new products there. We have spent close to 30% of revenue on R&D. And as we talked about last time, the SG&A has also increased in connection with the ongoing product releases and more activity.

Summing up, the adjusted EBITDA increased slightly in absolute terms, but declined slightly as a percentage of revenue. For the full year 2025, the adjusted EBITDA increased from $8 million last year to $67 million this year, with adjusted EBITDA margin increasing from 2% to 10%. As earlier communicated, our operating model is set up with a long-term ambition to move towards an EBITDA margin of 25%, which will require both continued revenue growth and a decline in long-term R&D costs to 15% to 20% of revenue, and also a similar reduction in SG&A.

Turning to cash costs. So total cash operating expenses were $80 million in Q4 '25 compared to $70 million in Q4 2024 and compared to $75 million last quarter. As we talked about last quarter, we are doing a lot of efforts with the new products, which drives costs up. This increase in cash operating expenses mainly reflect payroll expenses, which increased to $53.6 million from $46 million in Q4 '24. Of the increase, approximately $2 million relates to net salary adjustments, higher salary, and about around $4 million relates to the Memfault and Neuton.AI acquisition. The remaining increase is driven by higher bonus accruals and FX.

Nordic is exposed to currency fluctuations, mainly USD, euro, compared to the U.S. dollars. Compared to previous year, changes in these exchange rates increased quarterly operating expenses by approximately $3.7 million. The payroll increase from last quarter is mainly explained by Q3 lower due to vacations. The total number of Nordic employees at the end of Q4 was 1,431, including 59 employees that joined the acquisitions of Neuton and Memfault in Q3. This corresponds to an organic increase of 1% and a total increase of 5% compared to the end of 2024. There is increase in other OpEx is driven by high activity in Q4, including several tape-outs for new products. There are some moving parts here, but overall, we expect a similar cash cost level in Q1.

CapEx this quarter was $5 million, up from $3.5 million last year, but down from $6.6 million last quarter. CapEx on this slide is purchase of equipment and software and does not include capitalized R&D. CapEx investments are irregular, and this quarter should be viewed in the context of the broader trend over recent quarters. CapEx intensity last 12 months at 3.4% of revenue. Current CapEx is mainly supply chain capacity, supporting ongoing new product introductions.

Turning to cash flow. You can see that we had a neutral cash flow during Q4. This was mainly achieved by an EBITDA adjusted for capitalization of $9.1 million, offset by higher working capital. The main increase in net working capital this quarter comes from higher receivables and inventories, offset by higher accounts payable. Inventories increased by $12 million to $155 million and was driven by our strategic build of inventories. Net working capital at the low 22%.

Finally, before handing the word back to Vegard, we can have a look at our near-term outlook, where we are looking for solid revenue between $175 million to $195 million in the first quarter of 2026. We reported an adjusted gross margin of 52% in Q4 and expect the gross margin to remain above 50% also in the first quarter.

With that, I'll hand the floor over to Vegard for some closing remarks. Thank you.

Thank you, Pal. Let me round off with a few concluding remarks on our development through 2025. I think 2025 was a good year for Nordic, and we demonstrated solid progress operationally, strategically, and financially. First, operationally, on our Capital Markets Day back in 2024, we highlighted that our portfolio renewal program and launches of innovative new products would be crucial to drive our future growth. On that note, I'm very happy to see that we are progressing very well with the new products and launches we are making.

First, in short range, we have now announced 7 SoCs in the market-leading nRF54 Series product family since we launched the first chip about 15 months ago. These 7 unique SoCs meet a wide range of different customer requirements and applications. We have launched high-performance SoCs with multi-core MCUs, rich on memory and features, and entry-level SoCs for more cost-constrained applications. And finally, fit-for-purpose products such as the low-voltage SoC I talked about earlier today for the health care market. This is actually slightly ahead of what we committed to, and we'll continue to roll out new products this year.

In long range, we have broadened our addressable market and gained traction in key verticals by introducing the nRF9151 in the second half of 2024. And as I mentioned earlier today, we see strong momentum after we launched the leading technology, enabling true global coverage with satellite networks. We are also approaching the launch of the new nRF92 SoC on the 22-nanometer technology platform with higher performance, more integration, lower power consumption, lower cost, which is another great milestone coming up. PMIC and Wi-Fi are still small revenue-wise, but are also making good progress. We added 2 new PMICs in 2025 and expect to launch more in 2026.

The design win pipeline is growing very well. In Wi-Fi, our offering has centered around the nRF70 series, which is positioned as a Wi-Fi companion chip to our other SoCs. The next-generation nRF71 will build on the same integrated architecture as the nRF54 series on the 22-nanometer platform and will be the first Nordic Wi-Fi SoC built in-house, both hardware and software. nRF71 is expected to significantly expand our addressable market, and we expect to launch this towards the end of the year.

Strategically, we are transitioning from a hardware company to a complete solutions provider with chips -- from chips all the way to the cloud and aftermarket services. This enables our customers to focus on what they are best at, to design end-user products, application-specific software, apps, and the end-user interface. On the left side, you see the hardware pillar where our world-leading energy-efficient hardware SoCs. In the middle pillar, you see the software layer, which is becoming increasingly important as the complexity of our customer products increases. We have market-leading connectivity software stacks, our nRF Connect SDK software platform, and the new AI functionality, which I just covered. And finally, the services pillar, building on our Memfault acquisition last year, we now provide full device life cycle management capabilities.

Our customers increasingly need technology that enables them to securely monitor, maintain, and update millions of their devices in the field throughout their lifetimes. This is not longer just a nice-to-have. New regulatory frameworks such as the EU Cyber Resilience Act and the U.S. Cyber Trust Mark require secure-by-design products, continuous vulnerability management, and reliable over-the-air updates. These mandates begin to take effect from 2027 and fundamentally change what our customers must comply to. Nordic has had an early start with our NRF cloud offering, and the integration of Memfault's cloud life cycle management solution significantly strengthens this position across all our connectivity technologies.

Together, we provide a complete low-power optimized path for observability, diagnostics, and secure over-the-air firmware updates at scale. This combination of hardware, software and services puts Nordic in a unique position to deliver solutions to our customers' technical requirements and their regulatory obligations. This forms a truly differentiated end-to-end solution in the market.

At last, we have financially progressed. I called my intro at the CMD in 2024, driving growth and restoring profitability. I believe the numbers for 2025 overall show that we are moving in the right direction, also financially. Revenue increased by 31% to $668 million in 2025, which was stronger than we anticipated going into the year. Full year 2025 gross profit amounted to $346 million, an increase of 43% from $242 million in 2024. Reported EBITDA increased from negative $5 million in 2024 to a positive $66 million or 10% margin in 2025. While we still have a way to go, I would say we are overall on track towards the long-term financial ambitions we have outlined, which are to grow revenue by more than 20% on average from 2024 through 2030 and to move towards the 25% EBITDA margin.

With that, I think it's time to open for questions. So over to you, Stale.

Thank you, Vegard. [Operator Instructions]. With that, I will now hand it over to our operator, Kjell, to begin the Q&A session.

[Operator Instructions] The first question is from the line of Christoffer Bjønsson from DNB.

Congrats on the great quarter and the strong guide. I think just one thing we wanted to understand a bit better is you're now guiding Q1 growth around 20% on midpoint versus the quarter last year, you called out particularly strong orders that seemed a bit out of the ordinary for some key customers and also compared to the typical seasonality, you're kind of up 9% on the midpoint in Q1 on the guidance versus typically it's supposed to be down around high single digits. So anything you could say to help us understand like how much of that is just getting back to normal and market recovery and stuff like that versus if there could be any pull forward of people trying to get ahead of a potential shortage of components or any other abnormal things that we should keep in mind for our estimates for the rest of the year shape for the rest of the year?

Yes. Thanks, Christoffer. Good question. Yes, I think as I said, when we saw the revenue increase by 31% in '25, that's stronger than we had expected. So the market recovery from lower levels in '24 continued throughout 2025, and the strengthening continued towards the end of last year and into this year, which is reflected in our guidance. And through lots of dialogue and engagement with many customers, I think we have seen that quite some customers are now indicating they were selling more than they had forecasted in Q4. So that's clearly a positive.

I think it's also clear that some customers are now, to some degree, a bit worried about shortages in certain areas, as you commented on, Christoffer, such as memory and potentially other components, which -- and this concern is related to potentially the spreading over to other components. So I don't think we can rule out that there could be an element of restocking of inventories happening. But also it's clear that our customers have had increased sales of their products in Q4 compared to their original forecasting.

Just a quick follow-up on the numbers. On the OpEx side, can you just help us a bit understand your plans for '26? For '25, you had pretty cautious plans to try to keep it flattish on kind of a like-for-like basis. But now with this momentum, should we expect like a material step-up? Or is '25 going to be like a year where we see operating leverage and OpEx will grow double-digit?

Yes. So as I mentioned, we are investing heavily, and we are growing the product line and business. But we did a quite big step-up in the second half of the year. So I'm foreseeing that going into 2026. So as I said, Q1, pretty close to what we see in Q4. But a little bit caution on the U.S. dollar, which is weakening, which will have -- will probably be offsetting this slightly. So I would say, more or less the same levels as in Q4 going into Q1.

The next question is from the line of Harry Blaiklock from UBS.

Maybe just following up on that Christoffer's question on Q1. Wondering whether you can call out kind of any particular areas of strength, whether across kind of Tier 1 versus broad market, consumer versus industrial healthcare, or any particular regions? Anything you can give there would be super helpful.

I think overall, we see some strengthening continuing gradually in all our segments at the moment, both geographically, our market segments, as well as our technologies. So it is across the broad board as expected. And while still not contributing materially, we are also very confident and optimistic, positive on all of our new product launches, which is truly what we are focusing at, at the moment. And it's very energizing to see the products and the wins we have on new products at the moment.

Great. And then for my follow-up, over the last few days, you would have seen the news about one of your U.S. peers being acquired. Wondering whether you could just give a quick assessment of how that impacts the IoT connectivity segment and the competitive environment, how you're thinking about that?

Yes. Thank you. I think it's generally just to comment first, it's a very interesting proof point and recognition as such a large player as TI values the wireless connectivity IoT market and recognizes that it's an important and growing market in the semiconductor space. I also want to add, we have respected Silicon Labs as a good competitor. Having said that, we are very confident in our competitive position at the moment, probably more so than ever. And with all the new and great products we are releasing nowadays, these products are competing very effectively in the growing IoT market. Clearly, we are -- and I'm especially thinking of the leadership position we are taking on our 22-nanometer SoCs, and it's a great execution happening in the Nordic engineering teams when we now launch this unique, innovative, very, very leading products at the moment.

The next question is from the line of Craig McDowell from JPMorgan.

My first question was just in the context of higher DRAM pricing. Just what you're seeing in terms of customer conversations in terms of launching nRF54 series. Is there any risk that actually customers aren't accepting a new sort of potentially higher-priced connectivity chip in the context of sort of seeing higher DRAM pricing? Any risk of destocking there? That would be my first question.

It's really hard to -- what the customers see in relation to the 54, I guess, the higher price on the 54. Lower pricing.

Yes. I think we haven't shared so much on any details of that, which we will continue to do, obviously, also for competitive reasons. And our market and value pricing, clearly, we are focusing on value pricing in Nordic as we have a leading value proposition, which we offer to our customers, particularly with the combination of software, services, and everything we deliver on the technology platform.

If you think specifically of the 54 series, I think it's also clear that we are expanding our addressable market and our reach by the portfolio and the broader family we are bringing to market. So from the high-end products in the 54 series, which is, of course, quite a lot higher performance than previous products in the 52, 53 family. But also we are expanding in entry-level products. And the ASPs we are seeing in that picture are varying quite a lot, I think, is generally what we see.

I think good news, which we see is that lots of customers require more compute power at the edge. They require more software, more functionality, and are very often upgrading also to a more powerful Nordic SoC when they either update or develop new products.

Just my follow-up. You referred to sort of risk of supply tightness or constraints. Can you just remind us of the sort of terms with your fab partners for your own supply?

Yes. Of course. Our major foundry partners are TSMC and GlobalFoundries, working extremely closely and well with both of them, and in close partnerships, strong partnerships, and we are getting excellent support from them. Clearly, as we are also ramping up manufacturing, as you can see, there is a bit of tightening in certain elements of the supply chain happening at the moment. We are not constrained on that, but we are working, monitoring, and assessing that situation very closely. But overall, we have very strong support and are able to increase our manufacturing at the moment, as we are currently doing.

The next question is from Om Bakhda from Jefferies.

You mentioned that AI bolt-on that you sort of at the end of H1 last year is sort of key to being a compute solutions provider. And through the quarter, we've seen headlines around possible Apple wearable and maybe some more traction in this AI space. And so through the quarter, have you seen renewed interest and engagement on the wearable piece or any projects that you're sort of working on that could be announced later in the year?

Yes. I think, unfortunately, we only heard the last half of your question, but I think it was related to our traction within Edge AI, which is obviously an area we are focusing a lot at. And I would say we are clearly seeing very solid positive increased traction, both on our hardware side as well as our solutions side. The LM20 family, actually both the A and the B has very solid traction at the moment, so without and with hardware acceleration as people also need to utilize these NPU capabilities to speed up their computing at the edge for the reasons I mentioned, either bandwidth reasons, energy consumptions, latency times or just a requirement for local decision-making at the edge node device. So we are clearly seeing very positive traction on the hardware side.

And similarly, I would say on the Nordic AI labs with the pre. And maybe just to add to that, when we launch these things, it's also generally such that then you have the broad market applicability. So we see a multitude of customers using them. Typically, with us, that means that we have had some key customers also using them for a quarter or a couple of quarters prior to that.

And then just on your revenues [Technical Difficulty].

Okay. I think the question was on the Memfault revenue. We don't comment on the revenue. But back when we did the acquisition, we said that Memfault had an ARR of around $7 million, and we're expecting a 50% growth in 2025. And then as I said, the development has been as planned since the closing. So we're very happy with that team and that acquisition.

The next question is from the line of Martin Jungfleisch from BNP Paribas.

2 small follow-ups, please. The first one is really on the Q1 guidance. I mean, it implies around 9% growth at the midpoint. Can you just disclose if there's any larger positive mix or price impact already in from the nRF54, and if that increasing share in the mix could be an acceleration of revenue growth over the next couple of quarters?

Yes. It's a great question, and we understand the interest there, but we are not breaking out the revenue for the nRF54 series. What we have said is that we have now broadened out our product offering in that space. We have had a certain time of design wins of the design win activity with the earliest launched products, while momentum is growing and increasing for the more recently launched products. And we also see in the Bluetooth SIG certifications, it's starting to become slightly meaningful as a contribution, which means that we are clearly delivering to what we have said we were in '26. This is going to gradually start to become more meaningful as a revenue contributor for Nordic.

Okay. And as a follow-up, it's also on the foundry side of things. There's some reports that TSMC is raising prices in some mature nodes, and they may even shut down some certain older nodes. I mean just how are you affected here? Is that something that you're seeing that TSMC or raising prices? And if so, I mean, could you potentially pull more volumes towards GlobalFoundries, TSMC is raising prices or even shutting down more than not?

Yes. Thank you. I think we appreciate the interest in that area, and we see media coverage and even some speculations on some of these data points. I think the only thing we can say there is that we are working extremely closely with our supply chain and foundry partners, obviously, and within that, obviously, with TSMC as well, such that we are confident in having support in the coming time for our customers and manufacturing. And of course, there is also a bit of flexibility between the picture, as we are now having multiple sources and multiple technologies, 55 nano and 22 nano, et cetera. So that is also a picture we are working and monitoring, and planning for on a multiyear basis.

The next question is from Sébastien Sztabowicz from Kepler Cheuvreux.

Coming back to the broad market, which remains 35% or 30% below the peak. Have you made any kind of progress to reaccelerate the expansion on the broad market? Is there any specific progress there? And specifically in China, how the situation is evolving there? Do you see a bit of more market traction there? And where is competition happening in China? First question.

Yes. Thanks, Sébastien. Great question. I think to cover it quickly, and take the last one first. I think in China, we see that market growing similarly as other markets for Nordic at the moment. So it's growing, but it's growing at the pace we are growing. So same percentage of our growth is coming from China, plus or minus. That's the approximate situation. Broad market, lots of activity, lots of action we are taking in that space at the moment, and have done that now for quite some time. We are seeing the results.

A lot of that is also related to new product launches, which I talked about because new products create energy, create momentum, and create activity. And fortunately, I can confirm that we are seeing that amongst our distribution partners, which is great, though things take a little time for designing in industrialization, qualification, certifications, et cetera, before customers launch their product. So it's part of what we expect to see growing also throughout this year.

And coming back to the story of the question around the inventory replenishment, where do you see the inventories at your main distributor partner today? Have you seen any kind of rebuilding at the distributor level? Or it is more at the end customer that is happening right now?

Yes. I think our distributor inventory levels at the end of last year, we are probably somewhat on the lean side. And for Nordic, we continuously aim to keep inventory at healthy, balanced levels to be supporting our customers and their needs at all times with more SKUs and more products coming up at the moment as well. But yes, that's probably.

And on end customers, we see that most larger customers have been in a balanced situation for quite some time, and you can read that on reports. Some of them even have low inventories. And then we also saw in Q4 that broad market customers are at normalized levels, and then we see that in the replenishment levels, et cetera, they have. So healthy inventory levels.

Time is running fast here. And in the interest of time, I will hand it back to Stale for any further announcements.

Thank you, Kjell. We will conclude today's session. I have one announcement. Nordic will conduct 2 post Q4 2025 result Q&A group calls with analysts and investors. The first call will be for the U.S. investors and will be hosted by Bank of America and is scheduled today, Thursday, at 5:00 p.m. The second group call for European investors will take place tomorrow, Friday, and will be hosted by ODDO. This call will be attended by CEO, Vegard, and CFO, Pal, and will be moderated by the covering analysts at each brokerage. For details on how to register, please visit the IR calendar on our website. With that, I will now close today's Q&A session and hand over to Vegard for final remarks.

Thank you, everyone. Thanks for joining us, and this concludes today's call. Thank you.

Thank you.

At this time, I would like to welcome everyone to this Nordic Semiconductor Quarterly Presentation Third Quarter 2025. Today's call is being recorded. If you have any objections, please disconnect at this time. [Operator Instructions]

I'd now like to introduce Head of Investor Relations, Stale. Stale, over to you.

Thank you, Patrick, and good morning, everyone. As Patrick said, this presentation is being recorded and will be accessible on the Nordic website in the Investor Relations section. And additional, for those of you who missed the release, you can also find the earnings press release, quarterly report and presentation material on our website.

With me today, we have Vegard Wollan, our CEO; and Pal Elstad, our CFO. They will share details about our recent financial performance and updates on key business developments. Following the presentation, as Patrick said, we will move on to the Q&A session. During this session, live questions can be submitted through the Q&A dial-in feature. For instruction how to dial in, please refer to the earnings call invitation available under stock exchange notice on our IR website.

As a reminder, this presentation includes forward-looking statements that comes with inherent risks and uncertainties. Actual outcome may differ materially from those statements expressed or implied. We highly recommend reviewing our detailed Q3 quarterly report and the 2024 annual report for a deeper understanding of the risks and uncertainties that could impact our business operations.

With that, I will now hand the microphone over to our CEO, Vegard Wollan.

Thank you, Stale. My name is Vegard Wollan, and I'm the CEO of Nordic. And with me today, as always, our CFO, Pal Elstad. Let's look at the main takeaways from the third quarter. Revenue amounted to $179 million in the third quarter. This was an increase of 13% quarter -- year-on-year and in the high-end of the guiding range we presented for the quarter. Like we said at our second quarter presentation, we have been able to maintain a strong competitive position in the market, and we have been able to enjoy the market improvement over the past year. We see growth in both short-range and long-range and among both large key customers and in the broad market. In terms of end-user markets, the year-on-year growth mainly came from the Industrial and Healthcare segments this quarter with Consumer flat year-on-year from a strong Q3 last year.

Gross margin came in at 52%, supported by favorable product mix and positive contributions from the cloud service business, which we recently strengthened with the acquisition of Memfault, as well as the broad market business continuing to be improving. EBITDA came in at $18 million adjusted for some noncash costs related to the Memfault acquisition, and Pal will give you the details of that and other costs a bit later.

Q3 typically is the strongest quarter of the year, and we are guiding between $155 million and $175 million in revenue in the fourth quarter, which compares to $150 million in revenue in the fourth quarter last year. And we expect the gross margin to remain above the 50% level also in the fourth quarter. The top 10 customer share of revenue has stabilized at 57%, meaning that revenue has grown equally strong among our key customers and in the broad markets over the past year. Measured over the last 12 months, revenue from the top 10 customers now exceed the 2022 peak level. Revenue to other customers are still some 35% below peak levels, although we have seen a gradual improvement also in the broad market.

And as we have said, it remains a clear priority to continue to build momentum and accelerate growth among our broad market customers, and we believe the nRF54 series and the range of new products we are releasing and bringing to the market now will be an invaluable tool for us to drive this going forward.

We remain the clear design win leader when we look at the Bluetooth Low Energy end product certifications, with 31% of the designs certifying in Q3 and 30% over the past 12 months. This is 3, 4x -- 3 to 4x as many designs as our closest of our competitors. And note, as always, that this is counting a number of certifications, and this doesn't differ between high and lower volume products. And hence, you cannot translate this directly to revenue. And as we have said before, the transitioning between nRF52 and nRF53 Series products to the new nRF54 Series is creating a bit of a timing gap for us. And in Q3, less than 10% of the certifications for Nordic are with the new nRF54 products. This is obviously expected to increase now going forward.

We continue to see great customer traction with the nRF54 Series. And as I will get back to in a minute, we are continuing to broaden the 54 Series product family with new versions to make sure that we reach a large part of the short-range market with our leading technology and products for most applications. Some of the most exciting road maps and most innovative products are being developed together with our large key customers. And with our business model, these innovations are being integrated on our standard chips and SoCs and software stacks, and made available to our customers in the broad market.

However, product development takes time, and we need to allow for our customers to complete their designs and development processes, launch their products and ramp up production before we see significant revenue. And as we have said repeatedly, we will only see limited revenue effect of the nRF54 Series this year and expect to see accelerating revenue growth for the 54 Series from next year onwards.

The most recent addition to the nRF54 Series is the versatile high-performance 54LM20A, which was launched in September. We do already have many customers designing and developing with this new SoC, and volume production is planned to start in Q1 next year. The 54LM20A is designed for more advanced wireless products across multiple markets, including consumer, smart home and industrial. It is particularly well suited for human interface devices, including gaming peripherals that require low latency wireless connectivity and high-speed USB.

With 2 megabytes of nonvolatile memory and 512 kilobytes of on-chip RAM, it's also ideal for smart home devices such as Matter implementations, offering ample overhead for the application software without requiring external memory. This is the fourth variant in the nRF54L series. We started out with the baseline 54L15 and followed up with the 54L10 and the 54L05 for more cost-constrained applications, before we are now introducing the 54LM20A for more advanced and feature-rich applications.

The 54LM20A launch signifies the step in delivering a comprehensive 54 Series portfolio to cover a broad range of applications, marking the 54 Series as the front-runner product family in the industry. Like the other wireless SoCs in the nRF54L Series, the 54LM20A delivers twice the processing power and 3x the power consumption efficiency compared to the industry reference, the nRF52 Series. We will continue to launch new and innovative SoCs and new software solutions for the nRF54 Series to ensure that we reach the entire addressable market with a relevant and best-in-class product offering.

Nordic has achieved tremendous success with the nRF52 Series, which is also predominantly constituting most of our current revenue. And that family is the undisputed industry standard for Bluetooth Low Energy connectivity. This success is closely tied to the SoftDevice Bluetooth software stack and its support for the nRF52 Series. Now we are introducing the equivalent for the nRF54L Series, the nRF Connect SDK Bare Metal.

The NCS Bare Metal is an easy-to-use software solution for developers developing simpler Bluetooth applications where they don't need a real-time operating system. Developers using the Bare Metal option retain the possibility to upgrade to Zephyr-based NCS with full-featured capabilities if needed. Summing up, we are making it easy for customers and especially our broad market customers to migrate their existing software code base from nRF52 to a familiar programming environment on the nRF54L series.

Before Pal will take you through the financials, I would like to spend a minute on our acquisition of Memfault and the speed of integration into our service offering. Already 3 months after onboarding Memfault, we launched a new chip-to-cloud life cycle management solution that enables our customers to locate, monitor, manage and securely update devices over the air in the field with the new nRF Cloud powered by Memfault. The combination of Memfault's device observability and nRF Cloud device management enables development teams to monitor real-world behavior, speed up debugging and create fixes based on real data and reliably and securely deploy firmer updates over the air.

The ease of use this service offers represents a major step in terms of efficiency, and we have already seen several customers committing and other evaluating the new service offering, many others evaluating it. The new nRF Cloud services platform is now applicable to all Nordic connectivity technologies, short-range, long-range and Wi-Fi. A few days ago, the nRF Cloud powered by Memfault services platform was awarded the Cloud Computing Innovation of the Year in the 2025 Mobile Breakthrough Awards. This shows that nRF Cloud is being recognized for its contribution to cloud life cycle solutions within the global wireless technology industry.

We communicated our strategy to transition to a complete solutions provider with leading technology across the three strategic pillars. These are hardware, software and services. And it's great to see us starting to deliver on that. And here are some exciting news from the world of next-generation mobility. Also, the innovative e-bike brand incubated by the electric vehicle company, Rivian in the U.S. made a big splash last week in San Francisco with the launch of their stunning new e-bike, a fusion of design, performance and connected intelligence.

Nordic Semiconductor is extremely proud to be at the heart of this breakthrough, powering the bike's smart connectivity experience with three of our advanced wireless chips. The new short-range SoC, the 54H20, the nRF9151 from long range, which we launched in Q3 last year, and the nRF7001 Wi-Fi connectivity chip. On top of that, the e-bike's diagnostic, cloud connectivity and life management are enabled by our newly released nRF Cloud services, seamlessly integrated with Memfault's powerful device observability platform. This collaboration showcases Nordic's technology ecosystem and that we are accelerating the future of connected e-mobility from robust wireless performance, application processing to cloud intelligence that keep riders safer and smarter on every journey.

Thank you. And with that, I'll leave the floor to Pal.

Thank you, Vegard. Very good that you brought up the new products we're delivering, exciting news and showing how Nordic now is delivering all the way from chips to cloud, all with our new products. So very exciting news.

So I'll now go through the financials for Q3. So as Vegard mentioned, revenue amounted to $179 million in the third quarter, which was an increase of 13% from $159 million in Q3 2024. Compared to last quarter, the growth was 9%. We have a strong year-over-year if you look at the first 9 months. So first 9 months increased by 38% to close to $500 million, up from $361 million in the same period last year. Nordic maintains a strong competitive position, enabling it to benefit from a continuing gradual market recovery, both among our large customer and in the broad market.

The short-range business remains the revenue driver in absolute terms, growing by 7.4% to $167 million or 93% of our total revenue. Long-range revenue amounted to USD 9.8 million in Q3 '25, representing almost a fourfold increase in revenue compared to the same quarter last year and up 30% compared to the previous quarter. This reflects sales to an increasing number of both industrial and also consumer applications. In addition, long-range now see increasing contribution from nRF Cloud services after the acquisition of Memfault. It's worth mentioning that the cloud services are applicable throughout the technology offering, not just in the long-range business. Long-range in total is 5% of our revenue.

The other category includes the early-stage businesses in PMIC and Wi-Fi, ASICs and development tool sales. While the technology development in Wi-Fi and PMIC is progressing as planned, these business units are still in an early commercial phase and therefore, included in other.

And I want to turn to end user markets or the verticals we sell into. We see that Industrial and Healthcare is driving growth in the quarter. Industrial and Healthcare is now 35% of the total and increased 40% compared to the same period last year and 5% compared to last quarter. Part of this is because of the strong growth we see in long-range, including services, which for the most part goes to the industrial customers. However, we have previously said that revenue in Industrial and Healthcare still is dependent on a relatively small number of customers, and revenue reflects high sales to individual customers also in this quarter. Consumer revenue was flat year-over-year with tough comparable from Q3 last year when we saw especially strong performance in PC accessories and gaming and VR.

Gross margin ended at close to 52%, which is a strong improvement from the last past quarters and in line with our long-term target to be above 50%. The increase versus last quarter is mainly driven by changes in consumer and product mix and the improvements in the broad market we see. In addition, it's also important to mention that from Q3, we also have a positive contribution from the recently acquired services business. The nRF Cloud business has gross margins more in line with comparable software companies and will have a positive effect on group gross margins. To sum up, we maintain our long-term ambition to keep gross margins above 50%.

Now turning to operating model performance for Q3. As communicated, our operating model is set up with an ambition to move towards EBITDA margins of around 25% over the next 5 years. This quarter, we delivered a 13% revenue growth with a strong 2.4 percentage point gross margin improvement. So we have the foundation for improvements in our operating margin. However, OpEx spending will vary from quarter-to-quarter. And in this quarter, as I will turn to in the following slides, spending is higher. Despite higher revenue, we are still spending more than 27% of revenue on R&D compared with the target model of 15% to 20%. This is a small increase from 26% last year. This is partly explained by increased spending due to acquired businesses as well as higher variable pay as a result of higher performance.

We saw an uptick in SG&A due to high M&A activity in the quarter, FX developments and high activity related to new product releases. Summing up, we maintain a double-digit adjusted EBITDA margins with an adjusted EBITDA of $18 million, slight improvement from the same period last year. I have to mention what's included in the adjusted EBITDA. In the adjusted EBITDA, we have adjusted for share-based components of the payment to the founders for the Memfault acquisition. Under IFRS, this is treated as compensation and amortized over the vesting period and not included in the purchase price allocation. This added approximately $2.6 million in cost in the quarter, which have been excluded in calculation of adjusted EBITDA.

Now I'll turn to cash cost development. Total cash operating expenses were $75 million in Q3 compared to $63 million in Q3 last year. USD 12 million, this increase reflects acquisition and the organic cost increase was 11% year-over-year. Number of employees increased to 1,410 at the end of Q3, including 59 new employees from the Neuton acquisition and the Memfault acquisition. This corresponds to an organic decrease of 1% and a total increase of 2% compared to last year. The year-on-year cost increase mainly reflects cash payroll also when adjusting for acquisitions, which reflects both higher salaries and bonus accruals as a result of improved performance. There are some moving parts here, but overall, we expect a similar cash cost level in Q4.

Next page. I think it's important to give some more highlights or basis for the cost increase. So I'll go into detail of the main bridge items. So approximately $4 million of the quarter-on-quarter increase is salary increases. Every July, August, there is the annual salary increase to all employees, and that amounts to approximately $2 million comparing Q3 -- sorry, Q2 to Q3. As I also mentioned, we have added $4 million in payroll to employees in acquired businesses, as communicated at the Q2 presentation. Furthermore, we have made additional accruals for variable pay of $4 million in Q3 compared to the amount in Q2. This reflects stronger-than-expected performance through 2025, which we haven't fully accounted for in the first half P&L. We have also approximately $1 million in additional social security tax paid on RSUs and FX changes adds up an additional $1 million.

Now turning to CapEx. CapEx this quarter was $6.6 million, up from $3.1 million last year, but down from $9 million last quarter. CapEx on this slide is purchase of equipment and software, and it does not include capitalized R&D or acquisitions that you will see in the quarterly report. CapEx investments are irregular, and this quarter should be viewed in the context of the broader trend of the recent quarters. CapEx intensity last 12 months at 3.7% of revenue. Current CapEx is mainly in supply chain, buying testers, et cetera, and also IT equipment and smaller R&D investments.

Finally, to cash flow. Q3 was a very active quarter with both acquisitions and refinancing. So there's quite a few items here. So first of all, you can see that we had a total outflow of $26.6 million during the quarter, partly because parts of the acquisition was financed through cash on the balance sheet. This cash flow was mainly achieved by a solid cash flow from operations adjusted for capitalization of $18.4 million, driven by operating profits and timing effects of payroll, slightly offset by higher working capital. The main increase in net working capital this quarter comes from higher receivables, offset partly by lower inventories and higher accounts payable.

Inventories continues to be low and decreased $2 million in the quarter to $133 million. We commented earlier that we expect a decline in inventories during the year. However, we expect inventory levels to increase slightly in the near term. Net working capital over revenue was at 21% and is such below our target of 25%.

Then to the acquisitions. Cash flow -- cash outflow in connection with the acquisition of Memfault was $107 million after deducting the cash acquired and held back shares to founders. Finally, we did a capital raise of net $102.9 million to refinance the bridge loan that was taken in connection with the Memfault acquisition. In addition, the company has unused RCF of $200 million. So together with the cash on hand, we have more than $500 million in available cash.

With that, I'll turn the mic back to Vegard for closing remarks.

Thank you, Pal. Let me round off with a few concluding remarks summing up our performance so far this year before leaving you with our guidance for the fourth quarter. We have seen a solid revenue recovery over the past year. Revenue for the first 9 months was close to $0.5 billion at $498 million, an increase of 38% compared to the first 9 months last year. And if we look at revenue for the last 12 months, like the graph on the right on this slide, we are at $648 million, also up 38% from the same time last year. Of course, we know that these growth figures include more than doubling of revenues in the first quarter this year as our revenue back in Q1 2024 were heavily impacted by inventory adjustments.

But even taking that into account, I would still say we have seen stronger revenue growth in 2025 than we expected if we go back 1 year. The main reason is that we have managed to maintain a strong competitive position in short-range and continued to see very resilient demand for our nRF52 product portfolio. The nRF52 has been a strong workhorse for many, many years now, and we expect this product family to perform well also going forward. However, nRF54 is here now, and we are obviously expecting to see increasing contribution from our new product series from 2026 onwards.

We also see higher revenue contribution from long-range, where we have been an innovator in cellular IoT and are expanding that now into a position into a leading IoT offering for nonterrestrial networks or satellite-based communication as an additional option to cellular networks. We are looking forward to launching our new nRF92 on the 22-nanometer platform next year, further improving performance and power consumption further reducing, and making us even more cost competitive, as we obviously expect to see continued growth for our nRF Cloud services, building on the successful Memfault acquisition.

We continue to build momentum with new product launches in power management and are looking forward to gain more traction in Wi-Fi with the launch of the new nRF71 on 22-nanometer next year. Overall, I think we are delivering well this year. Looking back 1 year, we said we are aiming for more than 20% average annual growth throughout this decade and gradually to be moving towards our profitability target of 25% EBITDA margin. So far, I believe we are on track.

Turning to our near-term outlook. We are looking for revenue between $155 million and $175 million in the fourth quarter. The third quarter is typically the strongest of the year. And while this will be a decline from the previous quarter, we still expect growth from the fourth quarter last year. We reported a gross margin of 51.9% in Q3 and expect gross margin to remain above 50% also in the fourth quarter, which will be an improvement over the fourth quarter last year.

So with that, I think it's time to open for questions, and over to you, Stale.

Thank you, Vegard. We will now open the line for questions using the Q&A dial-in feature. Again for instruction on how to join the Q&A, please refer to the earnings call invitation posted on our IR website under the Stock Exchange notice section. To ensure as many participants as possible have a chance to ask questions, we kindly ask that you limit yourself to one question. After your initial response, you will be given the opportunity for one follow-up.

With that, I will now hand it over to our operator to begin the Q&A session.

[Operator Instructions] Our first question comes from the line of Christoffer Bjørnsen from DNB Carnegie.

I was just wondering, there's always been this government shutdown now in the U.S. for a couple of weeks, and we've seen how some essential entities like the SEC has shut down authorization of new electronics, I guess, across any product that has a radio in it. So just wondering, without quantifying it or talking about specific customers, have you seen any like launch schedules of new products from customers that you were expecting during the next weeks and months being pushed out in any way? Any changes in customer behavior there? That would be helpful. That's my first question.

Yes. Thanks, Christoffer. No, I think it's fair to say we haven't seen any major changes related to that. We haven't actually seen and been in any discussions and dialogue with our customers related to it on a problematic way either. Having said that, it's relatively recent, of course. And this may change some release plans for some customers. Let's hope and assume it doesn't last too long, but we shall see.

All right. That's helpful. And then a follow-up on the strong gross margin. Can you just help us unpack a bit like how much of that strength in the gross margin sequentially is due to the entry of the more software high gross margin business from Memfault? And how we should think about the underlying gross margin performance of the core chip business, so to say? Is it fair to assume that, that is improving as well? Or is it all due to the strength in the gross margin of the new acquired business?

No, absolutely, Christoph. It's a good and important question. And I'm not going to give you the exact number for the effect there because that's -- then you can calculate the exact services number easily. So we're too mature -- no, it's too early to talk about that right now, although the services business are delivering according to what we said at -- when we introduced the acquisition.

So going forward, we maintain our ambition to deliver the gross margins above 50%. And it all depends on the product customer mix and also how it's developing in the broad market. But it's, of course, obvious that the gross profit -- gross margin going up by 2 percentage points is, of course, it's also related to the underlying business, not just the services. That's clear.

Next up is Martin Jungfleisch from BNP Paribas.

The first question is just on the -- just the visibility on the demand trends that you are seeing over the next 2 to 3 quarters. If you could provide some color on that? And then also, would that visibility, I guess, bring you to the targeted 20% revenue growth that you are aiming for over the next -- over the decade? And then I guess, what needs to change? Is it mainly a macro topic? Or is it something that you would need to see more growth of your customers outside of the top 10? That's the first question.

Yes. Thanks. It's a good question. We -- I think our visibility is -- I think it's fair to say it's more or less back to the normal lead time-based type visibilities, which we usually see in our backlog building and our forecast machinery. So that's, I think, what we say on the visibility. We only guide for the current coming quarter and not for the -- not beyond that according to our guiding institute as you are aware of. I think it's fair to say though that at our CMD last year in 2024, we communicated our long-term ambition to deliver annual revenue growth above 20% throughout the decade. Market doesn't behave linearly and perfectly according to that, as we all know.

So -- but I think and we believe that we are clearly on track, both financially and most importantly for us with regards to renewing our product portfolio as most of what we currently are shipping is relatively old product as we know. And Nordic didn't launch so much product -- so much new products in -- between 2019 and 2024. And we have exciting times now where our customers are at least the fastest ones of them coming to -- coming closer to their releases and ramps, which we have said we expect to see acceleration of throughout 2026.

Great. And then as a follow-up, just on long range. I mean revenue is still quite strong. Can you just disclose if this is driven by a small number of larger customers or is it the broader market? And then can you disclose the long-range losses that you had in the quarter? I didn't see this in the presentation on the report.

Long-range losses. Yes. So long-range is currently a category of quite a few customers, it's fair to say. It's important to note that we have also added our nRF Cloud services revenue in that category, but we have certainly seen very positive growth and plateauing on a substantially higher level now than last year, which we are appreciative of. And we do see strong customer traction pipeline, particularly, as I mentioned, on the non-terrestrial networks, satellite additive technologies, which we are probably the leader in offering at the moment. Lots of traction in that space, which is giving us a design pipeline, which is making us confident in the growth plan for long range.

And regarding to the question on the losses, you're absolutely good spot that the APM, alternative performance measure in the quarterly report has been removed because we haven't been discussing that for some time. So it's taken out. But if you want to look at the -- or how the operating is going for the long-range business in the quarterly presentation, we have both the revenue and the OpEx related to that business. What's missing is, of course, the gross margin, but there, we're delivering according to what we've been stating before.

The next question will be from the line of Om Bakhda from Jefferies.

Just a quick question on revenue phasing. When we look at the Q4 guidance, the midpoint implies an 8% quarter-on-quarter decline in revenues, which is in line with your typical historic seasonality that we've seen in the business over the past decade. However, if we look ahead at what consensus is modeling and pricing it into the new year, we see that those numbers are looking at above seasonal trends as we move into the new year. And as you mentioned, 2025 has been a particularly strong year. And so it would be great to sort of understand what would need to happen in 2026 for this momentum to continue? And then I have a follow-up.

Yes. It's hard to say whether we -- the quarterly patterns are still following some seasonality, particularly in the Consumer segment, which is still about 2/3 of our business, as you can see. So -- but again, these effects do not apply to all customers. And I think if you look at our last 12 months and last 9 months, you have seen a very substantial growth. This growth is mainly driven by the market and is consisting of our relatively old product portfolio predominantly. And of course, the premise for us now to see us reaching our target and ambitious growth plan going forward is, of course, that the product renewal, which we are in the midst of is happening.

And the good news on that is that I think the Nordic team is executing very well at the moment. We are delivering new products on a multiple of them during a quarter at the moment, and we have done that now for the last about a year time. And as we know, some customers are moving relatively fast to production. Most customers are actually spending even 18, maybe some 24 months' time for their developments and design to be completed, certified, prototyped and ramped into production.

But we are really excited about that phase now because the way we develop this product is obviously with our large key customers, and then we bring that on to the broad market, and we see that traction happening both with large customers and in the broad market. So that's going to be driving us growing more than the market and more than our competitors.

Great. And then just on long-range revenue. So if we look back, we see that the revenues can tend to be quite volatile quarter-on-quarter. And so in this -- in Q3, we've seen that long-range has gone up about 30% quarter-on-quarter. And so what sort of gives you confidence that this performance in long-range is sustainable on a quarter-on-quarter basis? And how should we do things as we move into the fourth quarter? Is this momentum sustainable, that performance that we've had in the third quarter?

Yes. I think, of course, what we do see the design win and the customer pipeline, which are those moving to production in the coming time. That is giving us confidence that we are executing and on track to our ambitious growth plan and to be bringing our long-range business into profitability and with the growth rates, which we have communicated in that space. It's obviously all based on winning these designs.

And then, of course, it's also fair to be said in long-range, these are among the more complex designs we are doing because you have cellular, you have satellite, you have multiple connectivity technologies you may connect to and the service providers, et cetera. So from a design and development time point of view at our customer base, they are also on the longer side on that. But still, as we see more and more customers now moving into production, we are confident in the growth in long-range continuing.

It's fair to mention, also the 9151, which is a relatively new product, which has a more right price point for the customer is starting to ramp. And that's...

Yes, very good point, Pal. We outlined that sharpening focus strategy a year ago. And the 9151, which we launched in August last year was a very important first step of that, taking the cost down being the smallest module in the market, most -- and more cost effective, ultra-low power. And then the 92 Series, which we launch next year is taking -- 9251 is taking even a further step down in cost and up in performance. So really looking forward to that as well.

Next up is Sébastien Sztabowicz from Kepler Cheuvreux.

One on OpEx because in Q3, it was a little bit above expectation. How should we model the OpEx moving into 2026? Do you have any kind of indication for us? That would be the first question.

Sure. So as you said -- correctly said, total operating cash expenses were higher in Q3, $75 million in Q3 versus $63 million a year ago. This is partly explained by acquisitions, of course, but more importantly, positive effects of what Vegard commented in what we see stronger revenue growth in '25 than we expected a year back. So going more into the details, it's really relevant to compare Q2 to Q3. So we have the salary adjustments. That's, of course, a fixed number. We will go ahead.

Second is, as we commented last quarter, the acquisitions are adding $4 million to cash or to payroll compared to the number we had in Q2. Then there's two more sort of variable numbers. First of all, of course, accruals for full year bonuses and security tax on RSUs adding $5 million, $6 million in the quarter. That, of course, depends a little bit on where the performance in and also the adjustments for FX also varies here. So in total, taking into account that we have a positive holiday effect on salary in Q2 and also in Q3, overall, we expect OpEx level in Q4 similar as in Q3.

And for 2026, it was my question.

Yes. So absolutely. So looking -- we're not guiding for 2026, but looking at the Q3, Q4 numbers, I think, is a good basis.

Okay. That's very clear. And the second question is on the design activity with nRF54. You are quite happy with all the new products you are launching those days. Could you comment a little bit on the pace of design activity and also moving into '26, where you should start to see the first revenue contribution from the nRF52? How should we think about the revenue acceleration in 2026? Is it something very back-end loaded? Or you think you still expect something more linear during 2026, just to have an idea.

Yes. We appreciate the question and interest in it. I think it's -- for the first, it is a fantastic pipeline of designs and customers and projects we have combined now with our nRF54 designs, and just a few of them now started to see certifications in Q3. Whereas there is a fairly large pipeline of designs which haven't reached certification, obviously, at the moment. So I think that transitioning and that customer design and development time is varying a lot. There are some customers now in production, and there are some customers moving into production every week as we now stand.

But obviously, there are going to be a lot more customers moving into production throughout 2026. But that will happen on a continuous basis throughout the year, such that the contribution within -- in the numbers is also going to be accelerating throughout the year. And we are really excited about this, and we look forward to getting into a phase where you guys are also going to see more of the designs based on the nRF54 and our new products.

Unfortunately, we are running out of time. So I will now hand it back to Stale for any closing remarks.

Thank you, Patrick. Before we conclude today's session, I have one announcement. Tomorrow, Thursday, 30th of October, we will conduct a total of two post-Q3 Q&A group calls with analysts and investors. One group call with European investors hosted by DNB and one group call with U.S. investors hosted by Morgan Stanley. These calls will be attended by Vegard Wollan, the CEO; and Pal Elstad, the CFO and the IR team, and will be moderated by the covering analysts at each brokerage. For detail how to register, please visit IR calendar on our website.

With that, I will now close today's Q&A session and hand over to Vegard Wollan for final remarks.

Thank you, everyone, for joining us. Really appreciate it. And this concludes today's call. Thank you.

Thank you.